Blogs > Your Money

Dave Patterson and Erin Preston, a father-daughter team of Certified Financial Planner® licensees, provide thoughts and suggestions on a broad collection of personal finance topics.  Information provided in this BLOG is intended to be of a general nature and may not be appropriate for all situations.  Readers should consult with their own financial advisors before relying on any information contained herein.

Friday, December 17, 2010

Paychecks May Still Be Impacted

Well it’s over. Congress finally quit playing games and passed the extension of the Bush tax cuts, along with a number of other significant measures. Most everyone has probably already heard about the changes, so we won’t discuss them in detail hear.

Most people likely assume that the only change they’ll see in their first January paycheck is the 2% of-their-pay reduction in Social Security taxes. For some, that change may not take place for a few weeks. Fortunately, the delay shouldn’t result in the increases people would have experienced had the tax-cuts not been extended. Nevertheless, some may not see the Social Security tax reduction right away.

In an article in the Wall Street Journal Thursday, December 16 by Laura Sanders titled “Pay Won’t Reflect Tax-Code Changes for Several Weeks, Ms. Sanders noted that some payroll providers will require several weeks to make the required changes and adequately test them. Of particular concern for some processors is the 2% reduction in the payroll tax.

The article points out that: “a worker earning $106,800 or more – the maximum that Social Security tax applies to – will save $2,136 or about $82 for every two-week period”. That’s enough for a decent dinner out for two at a moderately-priced restaurant. If that applies to you, you’re fortunate. Just don’t make a dinner reservation yet. You may not see that $82 for a few weeks.


Post a Comment

Subscribe to Post Comments [Atom]

<< Home