Washington Dysfunction to be Reflected in Your Paycheck

Excerpt from an email circulated at Anderson – in case youdid not get one similar:

This notice is in regards to the Social Security (OASDI) taxdeducted from the January 3, 2012 paychecks.

In 2010, President Obama signed into law the Tax ReliefUnemployment Insurance Reauthorization, and Job Creation Act of 2010.  Included in the Act was a provision thatreduced the Social Security withholding rate from 6.2% to 4.2% for 2011.  This change was effective with wages paid onor after January 1, 2011 and included an expiration date of December 31,2011.   In order to comply with theexpiration date of December 31, 2011 and to insure that December earnings werepaid in a timely manner, the Social Security tax rate was changed back to 6.2%in time for the pay compute of the January 3, 2012 paychecks.

On December 23, 2011, President Obama signed the TemporaryPayroll Tax Cut Continuation Act of 2011 to extend the 2% reduction in SocialSecurity (OASDI) tax withholding on wages paid after January 1, 2012.  Since this change was not enacted in time toaffect the 1/3/2012 pay checks, monthly employees paid on January 3, 2012 weresubject to Social Security withholding tax at the old rate (6.2%).  A refund for the difference has been automaticallyprocessed and will be reflected on the February 1, 2012 paychecks.