Top
Federal payroll tax law changes for tax year ending 2012 and tax year beginning 2013
Article ID: 2001458
PrintOverview
There are several federal payroll-related tax changes that may affect you as an employer for tax year ending 2012 and tax year beginning 2013. Being aware of these constant changes can help you plan and prepare for the upcoming tax season.
Assumptions
You have an active Intuit Payroll subscription.
Expected Outcome
You will have information about federal payroll-related tax changes.
Details
Tax year beginning 2013
Form W-4, Employee's Withholding Allowance Certificate
Workers should review their withholding every year and if necessary, fill out a new Form W-4 and submit it to their employer.
Workers who claimed exempt on their 2012 Form W-4 will need to complete a new Form W-4 for tax year 2013 by February 18, 2013, in order to maintain their exempt status.
Workers who claimed exempt on their 2012 Form W-4 will need to complete a new Form W-4 for tax year 2013 by February 18, 2013, in order to maintain their exempt status.
Federal Tax Withholding Tables for 2013
1/3/2013 update:
On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (H.R. 8). The bill includes a measure that raises tax rates on incomes over $400,000 for individuals and $450,000 for couples. The bill does not extend the 2% social security payroll tax cut. For 2013, the employee social security tax rate will increase to 6.2%.
In conjunction with the passage of the bill, the IRS posted updated withholding guidance for 2013, which includes new rates for 2013 and supersedes the tables issued on December 31, 2012.
The newly revised version of Notice 1036, Early Release Copies of the 2013 Percentage Method Tables for Income Tax Withholding, contains the percentage method tables for income tax withholding effective January 1, 2013, and related information employers need to implement these changes. The Notice provides that the withholding tables should be used as soon as possible but no later than February 15, 2013.
On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (H.R. 8). The bill includes a measure that raises tax rates on incomes over $400,000 for individuals and $450,000 for couples. The bill does not extend the 2% social security payroll tax cut. For 2013, the employee social security tax rate will increase to 6.2%.
In conjunction with the passage of the bill, the IRS posted updated withholding guidance for 2013, which includes new rates for 2013 and supersedes the tables issued on December 31, 2012.
The newly revised version of Notice 1036, Early Release Copies of the 2013 Percentage Method Tables for Income Tax Withholding, contains the percentage method tables for income tax withholding effective January 1, 2013, and related information employers need to implement these changes. The Notice provides that the withholding tables should be used as soon as possible but no later than February 15, 2013.
Frequently Asked Questions
When will the new federal withholding tables be availabe in Intuit's products and services?
Intuit QuickBooks Payroll
- QuickBooks Payroll implemented the changes in Payroll Update 21304, released January 17, 2013.
Intuit QuickBooks Assisted Payroll
- QuickBooks Assisted Payroll implemented the changes in Payroll Update 21304, released January 17, 2013.
Intuit Online Payroll
- Online Payroll implemented the changes in the January 2013 release.
Intuit Full Service Payroll
- Online Payroll implemented the changes in the January 2013 release.
Social Security Taxes
- The wage base for the Social Security Old Age Survivor's and Disability Insurance (OASDI) tax will increase in 2013 to $113,700 from $110,100.
- The Social Security tax rate will be 6.2% for 2013. The temporary 2% cut in the employee portion of the Social Security tax is scheduled to expire on December 31, 2012.
- For more information, see the press release Social Security Announces 1.7 Percent Benefit Increase for 2013 and the 2013 Social Security Changes.
Additional Medicare Tax
Under the Patient Protection and Affordable Care Act (PPACA) as amended, a new provision to the Internal Revenue Code imposes an additional Medical tax increase on higher income individuals beginning January 1, 2013. The employee portion of the Medicare tax will increase by 0.9% (from 1.45% to 2.35%) on wages paid over $200,000. The employer portion of the Medicare tax will not be subject to the Additional Medicare Tax.
To learn more about the Additional Medicare Tax, click here to view the questions and answers the Internal Revenue Service (IRS) has posted on its website.
Will Intuit's products and services support the Additional Medicare Tax changes?
Intuit QuickBooks Payroll
Intuit QuickBooks Assisted Payroll
Intuit Online Payroll
Intuit Full Service Payroll
To learn more about the Additional Medicare Tax, click here to view the questions and answers the Internal Revenue Service (IRS) has posted on its website.
Will Intuit's products and services support the Additional Medicare Tax changes?
Intuit QuickBooks Payroll
- Yes. A new payroll tax item, Medicare Employee Addl Tax, is provided in Payroll Update 21301. If you have employees subject to Medicare tax, you should set up this new payroll tax item prior to creating employee paychecks for 2013. Click here for information.
Intuit QuickBooks Assisted Payroll
- Yes. A new payroll tax item, Medicare Employee Addl Tax, is provided in Payroll Update 21301. If you have employees subject to Medicare tax, you should set up this new payroll tax item prior to creating employee paychecks for 2013. Click here for information.
Intuit Online Payroll
- Yes, Online Payroll will support the changes in an upcoming release.
Intuit Full Service Payroll
- Yes, Full Service Payroll will support the changes in an upcoming release.
Tax year ending 2012
Federal Unemployment Tax Act (FUTA)
- The federal unemployment tax (FUTA) rate is 6.0% for 2012.
- The taxable wage base is the first $7,000 paid in wages to each employee during the calendar year.
- There are 19 states subject to FUTA credit reduction for tax year 2012.
For more information on the FUTA changes, click here.
Form W-2 and Form W-3
For the 2012 tax year, the IRS has implemented several changes in Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements. You can view the instructions for Forms W-2 and W-3 at the IRS website or download a PDF file.
Employee Social Security Tax Withholding
The 2012 Social Security tax rate is 4.2% for employees only. The amount reported in box 4 should not exceed $4,624.20 ($110,100 x 4.2%).
Reporting of the Cost of Coverage of Group Health Insurance
The IRS issued interim guidance (Notice 2011-28) to employers on informational reporting to employees of the cost of their group health insurance coverage reported on Form W-2, box 12 code DD. For more information on how the interim guidance affects the reporting of employees 2012 Forms W-2 (to be filed in 2013).
For more information on this topic and how Intuit services support Reporting Employer-Provided Health Coverage, click here.
Form W-3, Kind of Employer
Specific instructions for the checkboxes in box b, Kind of Employer, have been expanded to include examples for types of section 501(c) organizations.
New Title for Instructions
The title of the instructions for Forms W-2 and W-3 has been changed to General Instructions for Forms W-2 and W-3. The document also includes instructions for U.S. possessions and corrected wage and tax statements.
Employee Social Security Tax Withholding
The 2012 Social Security tax rate is 4.2% for employees only. The amount reported in box 4 should not exceed $4,624.20 ($110,100 x 4.2%).
Reporting of the Cost of Coverage of Group Health Insurance
The IRS issued interim guidance (Notice 2011-28) to employers on informational reporting to employees of the cost of their group health insurance coverage reported on Form W-2, box 12 code DD. For more information on how the interim guidance affects the reporting of employees 2012 Forms W-2 (to be filed in 2013).
For more information on this topic and how Intuit services support Reporting Employer-Provided Health Coverage, click here.
Form W-3, Kind of Employer
Specific instructions for the checkboxes in box b, Kind of Employer, have been expanded to include examples for types of section 501(c) organizations.
New Title for Instructions
The title of the instructions for Forms W-2 and W-3 has been changed to General Instructions for Forms W-2 and W-3. The document also includes instructions for U.S. possessions and corrected wage and tax statements.
Intuit Payroll is committed to keeping you up-to-date with your payroll service - making sure you have the latest information. We encourage you to revisit this article periodically for any updates and additional FAQs.
Susan2/9/2013