CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. IRS Issues New Employer Withholding Tax Instructions

IRS Issues New Employer Withholding Tax Instructions

by Mike Godfrey, Tax-News.com, Washington

21 December 2010


The United States’ Internal Revenue Service (IRS) has released instructions to help employers implement the 2011 cut in payroll taxes, along with new income tax withholding tables that employers will use during 2011.

The IRS pointed out that millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which has now been signed by President Obama, provides a 2% payroll tax cut for employees, reducing their social security tax withholding rate from 6.2% to 4.2% of wages paid. However, it was confirmed that this reduced social security withholding will have no effect on the employee’s future Social Security benefits.

Notice 1036, released by the IRS, contains the percentage method income tax withholding tables, the lower social security withholding rate, and related information that most employers need to implement these changes. The IRS said that it recognizes that the late enactment of these changes makes it difficult for many employers to quickly update their withholding systems.

However, employers should start using the new withholding tables and 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.

Employers and payroll companies will handle the withholding changes, so workers typically won’t need to take any additional action, such as filling out a new W-4 withholding form. As always, however, the IRS urges workers to review their withholding every year and, if necessary, fill out a new W-4 and give it to their employer.

TAGS: individuals | tax | law | employees | payroll | Internal Revenue Service (IRS) | legislation | social security | United States | individual income tax

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »