Payroll Services: News
Payroll Tax Reduction - Expires December 31, 2012
In February 2012, the Middle Class Tax Relief and Job Creation Act of 2012 granted an extension of the employee reduction in the Social Security tax rate from 6.2% to 4.2%. Unless Congress takes action to extend the reduction prior to the expiration date, this payroll tax cut will expire on Monday, December 31, 2012.
Effective January 1, 2013, the following changes to payroll taxes will occur:
- The 2013 Social Security tax rate will increase to 6.2%
- The new wage base limit for Social Security will be $113,700.
- An Additional Medicare Tax rate of 0.9% will apply to wages over $200,000. This is described as follows on the IRS.gov website:
"An employer must withhold Additional Medicare Tax from wages it pays to an individual in excess of $200,000 in a calendar year, without regard to the individual's filing status or wages paid by another employer, (IRS.gov, 2012)."
Note: There is no wage base limit for Medicare. Therefore, 1.45% will continue to be taxed on the first $200,000 of your taxable gross earnings and 2.35% above $200,000.
Retirement Contribution Limits
- Regarding 403(b) and 457(b) accounts, the 2013 contribution limit is $17,500, a $500 increase over 2012.
Changes to Calendar Year 2012 W-2 Forms
As required by the Patient Protection and Affordable Care Act, Box 12 DD on the form W-2 will now be populated with insurance coverage costs under an employer-sponsored group health plan. The UT System has elected to use the "Premium Charged Method" to compute the amount reported. This method adds the employer and employee premiums and then excludes certain costs such as Basic Life, Basic Accidental Death and Dismemberment, and Employee Assistance Program. The amount reported is only a reporting requirement and does not affect your 2012 income taxes.
We will monitor the actions of Congress closely and share any information regarding changes to calendar as it becomes available.
For Medical Resident FICA FAQ Information Click Here