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    Federal payroll tax law changes for tax year ending 2012 and tax year beginning 2013.

    Article ID: 2001458

    Overview

    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.

    Expected Outcome

    You will have information about federal payroll-related tax changes.

    Assumptions

    You have an active Intuit Payroll subscription.

    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.

    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.



    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

    • Full Service 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
    • 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
    • Online Payroll implemented the changes in the January 2013 release.

    Intuit Full Service Payroll
    • Full Service Payroll implemented the changes in the January 2013 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.
    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.

    11 comments

    Susan2/9/2013

    When can I get the new 2013 tax forms?

    Reply

    Kriz2/14/2013

    Hi Susan,

    I'm an Intuit employee and I saw your comment. The 2013 tax forms will be made available to you through QuickBooks Payroll updates.

    The majority of the updates are released at the end of the year since federal and state agencies release the bulk of its changes for the upcoming year. However, QuickBooks Payroll releases payroll updates throughout the year because varius agencies makes changes to their payroll tax calculations and tax forms during the year.

    To make sure that you have the lates tax table version, in QuickBooks, from the Employees menu, choose Get Payroll Update, then click the Update button.

    More information on QuickBooks Payroll update is documented in the article FAQs about QuickBooks Payroll Updates. I have also added this link to the Related Article section above.

    I hope this helps. Thank you for your comment.

    Jo Ann6/25/2013

    Hi Denise,

    If you are using a new payroll item to pay your employees and removed the old payroll item from the employee profile this can happen. Try adding in the old payroll item back to the employee profile and leave the item as $0.00 when creating paychecks. This will show the YTD on the old payroll item and the new payroll item you created.

    Hope this helps. I will have this article updated to reflect this information.

    Thanks for commenting.

    Gaylon2/14/2013

    Question: On the W-2 form, Box 12, we need to enter the amount of Employer paid Health Insurance. This amount is not taxable. So, how do we enter this infomation so that it will end up on the W-2 form for 2013?

    Reply

    Susan2/15/2013

    Hi Gaylon,

    I am an Intuit employee and saw your comment. I think this article will help you add this information to your W-2s: QuickBooks Payroll: Reporting Employer-Sponsored Health Coverage Cost for Tax Year 2013. If you want more information about other healthcare reforms check out this article: Information about Healthcare Reform. I have added a link to this article above. I hope this helps. Thanks for posting a comment.

    Carol3/12/2013

    How do I change the futa tax rate from .6% to 1.2%. My only chooses are 6.0% and .06%

    Reply

    Melody4/4/2013

    Hi Carol,

    FUTA rate is actually included in the tax table update and thus we cannot change the rate manually.

    The article Taxes and rates: wage bases and limits will show you the Tax rate and limit per Federal Tax

    I hope this helps! Thank you for your comment.

    Elaine3/20/2013

    I understand that the new 2013 941 is available through the payroll updates but my question is when will intuit make it available to us the client I checked and did a current payroll update and it is still showing 2012 941

    Reply

    Kriz3/25/2013

    Hi Elaine,

    The 941 2013 form is available in the Tax Table 21308 update which was released last 03/21/2013.

    You should get the latest tax form after downloading this tax table update.

    I hope this answers your question. Thank you for the comment.

    Ron4/3/2013

    I recently began to handle the payroll for my company and I use QB Payroll service. I'm wondering how the tax deduction on my paycheck, "Federal Withholding" is calculated. I know that the SS calculation is 6.2% for both employee and employer, and that Medicare is 1.45% for both employee and employer. Can anyone help?

    Thank you.

    Reply

    Dale4/4/2013

    20

    Hi Ron,

    This article will provide you details as to how Federal Withholding is being calculated: Three methods for calculating federal income tax

    Hope this helps. Thanks for posting a comment.

    Comments can not be added at this time.

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