Fiscal Cliff and Payroll Changes for 2013
As of this writing, going off the fiscal cliff will likely affect 88 percent of U.S. taxpayers, with the average taxes rising by an average of $3,500 a year.
The reasons for this are that the Bush-era tax cuts are set to expire, which brings the tax system back to 2001 levels. Also set to lapse are a 2 percent payroll tax cut and a series of other temporary tax cuts that
President Obama enacted. These include:
- The enhanced dependent care credit
- The enhanced child credit
- The enhanced adoption credit
- The enhanced earned-income credit
- Repeal of personal exemption phase-out
- Repeal of limit on itemized deductions
- The Enhanced student loan interest deduction
- The exemption for mortgage debt forgiveness.
For your Payroll module, minimally this changes will require the following:
- Increasing the Employee Social Security Tax percent from 4.2 percent to 6.2 percent. – This 2 percent rise in payroll taxes would result in 160 million American wage earners seeing their tax bills increase by an average of $1,000.
- As yet to be determined changes to the Federal Tax Table Percentages. – Federal Tax Tables will need to be adjusted – These specific changes may not be know until sometime in the first quarter of 2013. If tax changes are not enacted day one of 2013, it is likely that when the changes are finalized, it may require supplemental withholding for employees for the remainder of 2013.
- A .9% Medicare Surtax for individuals making over $200,000 a year. Depending on the Payroll program that your, it may require some changes to the Federal Tax Code set-up.
Currently there are Payroll updates out for the above issues, however, depending on any last minute fiscal negotiations, some of the above could change between now and January of 2013, so there may be supplemental software updates in January 2013.
Please contact the CCS Retail Systems Support Department for assistance with the above mentioned changes.