What You Should Know About Payroll Taxes for 2012
Posted by Michael Beauchemin on Wed, Jan 25, 2012 @ 01:14 PM
Another year is upon us and with that are some of the 2012 changes and events that businesses need to be aware of and monitor.
Social Security Wage Limits and Tax Rates
For 2012 the wage limit for Social Security tax is $110,100. This means that the first $110,100 of wages are subject to the Social Security tax. Any earned income over $110,100 is not subject to any Social Security tax.
For employers, the Social Security tax rate is 6.2%. For employees, the Social Security tax rate for the first two months of 2012 is 4.2%. It is widely expected that this rate will be extended for the balance of 2012, however it is not given.
Medicare Wage Limits and Tax Rates
Unlike Social Security wages that have a wage limit, Medicare taxes have no limit. All earned income is subject to the 1.45% Medicare tax. This tax rate has not changed and remains at 1.45% for the employer and 1.45% for the employee.
Below is a table that summarizes the taxes an employer and an employee owe.
| Employee |
|
| Social Security |
4.2% on first $110,100 of wages |
| Medicare |
1.45% of wages - no limit |
| Federal Withholding |
Depends on filing status and number of allowances claimed |
| State Withholdings |
Depends on filing status and number of allowances claimed |
| Employer |
|
| Socail Security |
6.2% on first $110,100 of wages |
| Medicare |
1.45% of wages - no limit |
| FUTA (Federal Unemployment Tax) |
0.6% on the first $7,000 of wages per employee |
| SUTA (State Unemployment Tax) |
Depends on state and business SUTA rate |
Note:
The FUTA rate is set at 6.0% with an off-setting state tax credit of up to 5.4%. This off-setting state tax credit brings the effective FUTA rate down to 0.6% in most cases.
For a more comprehensive summary of Payroll taxes for 2012, download our 2012 Payroll Tax Guide Summary.
