The IRS has updated the income tax withholding tables for 2013 (revised Notice 1036) to reflect the permanent income tax rates enacted by the American Taxpayer Relief Act of 2012 enacted on Jan. 2, 2013.
The IRS originally issued Notice 1036 on Dec. 31, 2012, which took into account the income tax rates that would have been in effect in 2013 without the legislation enacted on Jan. 2. The newly revised version of Notice 1036 includes the percentage method income-tax withholding tables. Recognizing the administrative burden that employers face in implementing the new income tax withholding tables, the IRS has given employers until Feb. 15, 2013, to implement them. The 2012 withholding tables should be used until the 2013 withholding tables are implemented.
In addition, employers should begin withholding Social Security tax at the rate of 6.2% of wages paid following the expiration of the temporary two-percentage-point payroll tax cut in effect for 2011 and 2012. The reduced payroll tax rates were not extended by the new legislation.
Employers should start using the revised withholding tables and correct the amount of Social Security tax withheld as soon as possible in 2013 but no later than Feb. 15, 2013. For any Social Security tax under-withheld before that date, employers should make the appropriate adjustment in worker pay as soon as possible, but no later than March 31, 2013.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
