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William Perez

IRS Releases Wage Withholding Guidance for 2011

By December 20, 2010

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The Internal Revenue Service, acting quickly after the passage of the Tax Relief Act of 2010, has notified employers and payroll service firms of the income tax withholding and Social Security withholding changes that were effected as a result of the recently enacted legislation.

Workers should see a decrease in their Social Security withholdings. The Tax Relief Act provides a temporary, one-year reduction in the employee-portion of Social Security taxes. For 2011 only, employees will pay 4.2% of their wages, up to the Social Security wage base of $106,800. This is a reduction of two percentage points from the statutory 6.2% rate.

The IRS directed employers to implement the lower Social Security withholding "as soon as possible in 2011 but not later than Jan. 31, 2011." If the employer does end up withholding at the higher 6.2% rate, the IRS directed employers to reimburse employees for the difference "not later than March 31, 2011."

The interim withholding tables issued by the IRS reflects the newly extended tax rates for 2011 and reflects the expiration, as scheduled, of the Making Work Pay Credit.

The IRS expects to issue an updated version of Publication 15, the Employer's Tax Guide, "in a few days." The IRS also cautioned that employees most likely will not need to adjust their withholding allowances using Form W-4 solely in response to the Tax Relief Act.

From the IRS:

December 31, 2010 at 6:16 pm
(1) David says:

I’ve seen the 2011 tax withholding tables and it appears to me the increase in the FIT withholding almost completely washes out the social security tax reduction. Am I missing something?

December 8, 2011 at 5:00 pm
(2) Benjamin Reed says:

i need to talk to someone about Benjamin william Reed withholding on has ss when he turned 73 yrs of age, dose not have to fil incone tax? then why are they still taking federal income tax withholding 92.80 every month from his check.
Thanks Ben

December 9, 2011 at 2:41 pm
(3) William Perez says:

Is SSA withholding federal income tax from his social security benefits? Or is SSA withholding premiums for Medicare coverage? If it’s for federal income taxes, then the recipient can file a tax return with the IRS to recover any overpaid withholding. If SSA is withholding too much, he can ask the SSA to withhold less by filling out Form W-4V and sending it to SSA.

March 9, 2012 at 10:02 pm
(4) Kevin Heil says:

I have a question my employer used the 6.2% for the 2011 year instead of the 4.2% he said that it never changed and he never received any notice from the IRS!!! Is there any thing I can do and what is the proper way to do this my calculations says he still owes me about $1500.00!! Thank you any input would be greatly appreciated!!

March 10, 2012 at 2:01 pm
(5) William Perez says:

Have your employer read the IRS news release IR-2010-124. If there’s a payroll service involved, he should talk to this account manager to discuss how to resolve this issue. If no progress is made in a reasonable amount of time, escalate this issue by calling the IRS.

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