Payroll Tax Cut - Isn't What you Think.by Patty Stinnett on 02/22/13
My first post will be about the Payroll Tax Cut; I have had several Clients ask me about this, so I will explain exactly where this "extra money" in your paycheck is coming from.
Normally, an Employer pays 6.2 percent of Social Security Tax on wages, and the Employee also pays 6.2 percent, for a combined total of 12.4 percent being paid into your Social Security.
The Payroll Tax cut changes this formula;
Employees now pay 4.2 percent of their wages, instead of the usual 6.2 percent, meaning that a worker making $50,000.00 a year who is paid twice a month saves $41.67 in every paycheck. The Employee is now paying 2.0 percent less Social Security Tax.
The Employer continues to pay 6.2 percent of Social Security Tax on wages.
The question that begs an answer here is how will this impact you when you begin to draw Social Security?