Archive for the ‘payroll tax cuts’ Category
Tax Planning for 2013 – The Payroll Tax Cut
Enacted in 2011, employees and self-employed people alike received a temporary 2% cut in their payroll taxes. Mired in Congress, the extension of this tax cut was given some odd treatment because the two sides of the aisle couldn’t agree on how to pay for it so for a while, there was just a two month extension. At the end of February, a full year extension was finally passed but as we get closer to the end of the year, it’s unclear what the fate of this tax cut is going to be.
If you’re an employee (of a company you don’t own), there’s not a lot you can do to plan. Either the cut will be extended and you’ll get or it won’t and you’ll see your pay check take a hair cut. For the self-employed who pay SE tax, you fate is about the same. If you’re an employee of your S-Corporation, there is a little bit you can do. In December, if the political winds are telling you that an extension isn’t going to pass, it might be a good time to push some salary (maybe a one time bonus or an advance) from 2013 into 2012. Other than that, this one is a big “wait and see.”
Where Are We With the Payroll Tax Cut?
Here it is, January 15 and we’re about a quarter way through the two month payroll tax cut extension with no word as to whether it’s going to be extended or not. We have a lot of news on the Republican nominee for president and if you head over to C-Span, I’m not seeing much on the schedule other then….primary stuff. President Obama is talking about combining agencies in his latest move but I can’t find anything about extending the payroll tax through the end of the year.
When I searched for “payroll tax cut” on Google News, you can see what I get. There’s a story from Friday where John Boehner talked about circumventing the Tea Party contingent of his party to get the tax cut pushed through and it talks about a new round of talks “in the coming days.” Not sure what that means. There are also a few stories about that make it sound like we should be surprised the mortgage fees went up to pay for two month tax cut (this was part of the deal). Finally, this Washington Times piece talks about how most Congressman won’t even be back from their recess until later in the month and one of the quotes talk about the talks going down to the wire. The House starts back up with the Thursday and the Senate doesn’t return until January 23.