Congress Passes Payroll Tax Cut Extension
February 27, 2012
When I googled TTCA a few minutes ago, my top result was the Tibetan Terrier Club of American followed by the Texas Tennis Coaches Association. Apparently, some things are considered more interesting than the Temporary Payroll Tax Cut Continuation Act of 2011, aka TTCA. Go figure.
But as employers, it is important for you to know that in February, Congress came through for the American worker and extended the 2% FICA tax cut through the end of 2012 (bonus points if you know what FICA stands for). As you will recall, TTCA originally extended the 2% cut of 2011 only through the end of February 2012. The passage of H.R. 3630 the “Middle Class Tax Relief and Job Creation Act of 2012” not only extends the 2% FICA reduction through the end of this year, but it also repeals the TTCA recapture provision, which applied to taxpayers whose wages for the first two months of this year exceeded $18,350.
This means that Social Security tax will continue to be calculated at the reduced rate of 4.2% on wages up to $110,100, but the employer match portion remains at 6.2%. Self-employed workers will also receive a 2% reduction which translates to 10.4% for those individuals. Enjoy the holiday.
Almost forgot, the bonus answer is Federal Insurance Contributions Act (FICA) – or it could be the Fur Information Council of America. I love Google.
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