By Sheila Emory

On February 22^nd, President Obama signed the payroll tax cut extension into law.  This extension affects nearly 160 million workers by continuing to keep the social security withholding rate at 4.2%, instead of the 6.2% in effect prior to 2011.  This extension is set to expire on December 31, 2012.

 Those who are self-employed will also see a reduction in their social security withholding from 12.4% to 10.4%, up to a threshold of $110,100 of wages and net self-employment income. 

 The new lower rate will have no effect on workers’ future social security benefits.

By Gina Lemons

Have you noticed that the social security tax withheld from your employees’ pay checks is still less than the amount you have to match as an employer? That is due the Payroll Tax Cut Extension that Congress passed at the end on 2011. Employees pay in 4.2% toward Social Security while employers pay in 6.2% toward that same program. The two-month extension is set to expire February 29, 2012, unless Congress can agree to extend it through the end of 2012.

Employers who use computer software to prepare their payroll shouldn’t worry. Companies like Intuit, which owns QuickBooks, will issue updates via their internet links as soon as the law is passed. However, employers who are not connected to the internet may have to wait on CD updates. This delay may result in added time and cost to manually calculate the 1^st payroll in March. My advice is to update your QuickBooks (or other software) when prompted. If you are not connected to the Internet, get connected. It will save you a lot of frustration and time.