Payroll & Tax

[fduckworth]

thank you!

[loreacct · Accepted solution]

I had not heard about a limit so I looked it up online.  Hopefully, this article is correct and we do not have to do anything.

"The two-month bill originally passed by the Senate was modified in one form.  The original bill required that employers limit the lower withholding to the first $18,350 (1/6 of the annual FICA limit of $110,000 for 2012), with the rate rising to 6.2% on any wages paid after that point.  Responding to criticism about the costs to businesses of implementing such a cap, the bill removed that requirement.

However, that rule was replaced with a “recapture” provision that will be imposed on the employee.  If an employee receives wages in excess of $18,350 during that two month period, the employee will have imposed an additional tax of 2% of such excess wages.  That recapture tax would be paid with the employee’s 2012 Form 1040."

http://ascpa.wordpress.com/2011/12/23/irs-announces-temporary-extension-of-fica-rate-reduction-inclu...

Lorri

[fduckworth]

We have physician clients who have hit the $18,350 max for the rate reduction with the 2nd January pay.  I assumed Peachtree's formulas would up the rate back to 6.2% once they went over the max but it continued their FICA rate at 4.2%.  How do I fix/adjust this?  Do we have to manually calculate with each payroll?