Congress Extends 2% Payroll Tax Cut Till End of 2012
Congress late last week passed a new bill (and President Obama has already indicated he will sign it) to extend the 2% payroll tax cut from February 29, 2012 till the end of 2012. This means that your employee’s FICA contribution will remain at 4.2% for the rest of the year instead of the schedule return to the normal 6.2% rate.
For self-employed farmers, your total FICA contribution will be 10.4% instead of the normal 12.4%. As normal, it appears that election year politics is in play here and we would not expect this to continue into 2013.
I have seen several taxpayers calculate their employee’s paychecks for 2011 incorrectly and hope most of our farmers have already updated their payroll system to deduct and pay the proper amount.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
Regarding the payroll tax cut, will upper income wage earners have to “payback” the 2% cut with their 2012 personal returns ? In the original two month cut, there was a provision calling for wage earners of over $106,400 to have to payback the 2% cut when they filed their 2012 personal returns. Has this been done away with ? I have not seen this commented on anywhere in the media.