Social Security Tax
 Employee Social Security tax withholding will remain at 4.2% until February 29th. We will advise of any changes when they occur. Employer tax remains at 6.2%. Continue making Form 941 deposits using the same total tax calculation used in 2011.

Federal Income Tax

The Internal Revenue Service has not yet released Publication 15 for 2012. We will send an Alert as soon as it is available. For those of you using software, we will assume the software provider will automatically update. Until that time, continue to use the 2011 tax tables.

Federal Unemployment Tax (FUTA)

On Jan. 1, 2011 the Commonwealth marked the second consecutive year with an outstanding loan balance to the federal government, currently at $3.123 billion. This outstanding debt causes an automatic FUTA credit loss of .3 percent for payments relating to 2011 wages. Therefore, employers will see their FUTA tax liability go from .6% to .9% on January 1, 2012. An additional .3 percent in FUTA credit will be lost every year until the Commonwealth eliminates its outstanding debt to the federal government.

It is not important that your software provider has not, as yet, updated this tax. The tax is not payable until April, so please give them time to make the correction.

The additional FUTA tax for 2011 will be collected in January 2012 with the filing of your annual Form 940 tax return.