Dec 21st 2010
The Internal Revenue Service has released the 2011 Percentage Method Tables for Income Tax that were developed as a result of the recently passed Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.
The new tables, available in Notice 1036,should be implementedby employers as soon as possible, but no later than January 31, 2011.
New for 2011
Social Security and Medicare tax – For 2011, the employee tax rate for Social Security is 4.2 percent and the wage base limit is $106,800. The employer tax rate remains unchanged at 6.2 percent. The Medicare tax rate is unchanged for employers and employees.
Making Work Pay credit expires – The Making Work Pay credit expires December 31, 2010. The income tax withholding tables are not adjusted for the Making Work Pay credit. There is no longer an optional additional withholding adjustment for pensions.
Advance payment of earned income credit expires – The option of receiving advance payment of the EIC expires December 31, 2010. The IRS suggests that if any employee expects to be eligible for the EIC, they may reduce their withholding to receive the benefit of a portion of the credit throughout the year.
The procedure for withholding on wages on nonresident aliens has been modified and is included in the notice.