Why your paychecks will be smaller this year despite the American Taxpayer Relief Act:
Although most Americans will not see an increase in their 2013 income taxes they still will see a decrease in their paychecks. This is due to the two percentage point cut in the employee’s share of the Social Security tax. For tax years 2010 & 2011 the Social Security rate for employees had been reduced from 6.2% to 4.2%. This tax break was not renewed with the American Taxpayer Relief Act. Therefore employees will see a reduction in their actual take home pay up to the social security wage base of $113,700. Those who are self-employed and make quarterly estimated tax payments should contact their accountants to ensure that their withholding or federal estimated tax payments are calculated accurately.
For more details on social security rates visit the Social Security Administration page.
Dawn Schneider has been a Certified Public Accountant (CPA) for over 20 years. She enjoys providing top notch service to individuals and small to mid-sized business for all of their accounting and tax needs.