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Payroll Tax Cut to Boost Take-Home for Most Workers

WASHINGTON - The Internal Revenue Service has released instructions to help employers implement the 2011 cut in payroll taxes.

As a result of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, millions of workers will see their take-home pay rise.

The increase in take-home pay is a result of a reduction in Social Security tax withholding for employees from 6.2% to 4.2%. The employer's matching contribution rate of 6.2% remains unchanged. This reduced Social Security withholding will have no effect on the employee's future Social Security benefits.

Employers should begin reducing the amount of Social Security tax withheld as soon as possible in 2011, but not later than January 31, 2011. For any Social Security tax over withheld during January, employers should make an offsetting adjustment in workers' pay as soon as possible but not later than March 31, 2011.

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Tax Tips Small Business

Reimbursing Your Employees for Business Expenses

What method should you choose?

Attracting and keeping good employees is a goal in any business. One way to make life easier for your employees is to have an easy to use reimbursement plan. Travel, transportation, moving, and educational expenses are common reimbursable expenses. As the employer, you have the option to set up an accountable or nonaccountable reimbursement plan. Under either plan, you can deduct many of the business expenses paid to or for employees. However, the plan you choose can make a big difference to your employees.

Small Business Quick Tip

If your business owns a vehicle that is available for an employee's personal and business use, the vehicle is nevertheless considered used 100 percent for business on the business tax return. The personal-use percentage is included on the employee's W-2 as an additional compensation.

Saturday, 19th May 2012

What is an Enrolled Agent and why should I care?

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Tax Tips Personal

Making Gifts

Know what gifts are taxable

When an individual receives a gift, whether cash or property, the gift is generally not taxable to that individual. Sometimes, however, the gift giver may incur a gift tax liability when making certain gifts. If you make a gift to family members or other individuals, you can give $12,000 or less in value to a single individual during the year Read more...

Personal Quick Tip

You can actively participate in your employer's qualified plan and may still be able to contribute to a Roth IRA. A deduction for contributions to a traditional IRA may be limited or nondeductible if you are a participant in a qualified retirement plan.