The Skinny On Payroll Taxes


by Brandi Savitt January 17, 2013

Where Is Your Money Going?

I was out to dinner last night with two friends who both recently received their first paycheck of 2013.  Needless to say, they were a little shocked when they opened their checks to find a significantly smaller amount than their check from just two weeks ago – close to a thousand dollars less!  And while they were expecting a change, seeing it is believing it…  but it’s not necessarily understanding it.  Here’s what you need to know about the changes in your paycheck!

Selective Memory…

For 2011 & 2012 the amount we all paid into Social Security was temporarily reduced from 6.2% to 4.2% in order to spur more spending in the marketplace.  What we’re experiencing now is not a tax increase at all, but rather the ending of  a “Payroll Tax Holiday”.  The problem is we’ve all gotten used to having that extra 2% in our pockets…

Yes, Social Security

So, just to be clear, the extra 2% ‘deduction’ in your paycheck is your employee share of Social Security payroll taxes.  And, with the future of Social Security uncertain at best, knowing that you may never see your benefits when you retire makes this all sting a little bit more.  But that’s another story…

Don’t Blame It on the President

Those who were paying attention during the presidential campaign knew it was both Obama and Romney’s position NOT to renew the payroll tax break past 2012.  It seems that the idea of extending it another year was never even a debate when Congress was fighting over the Fiscal Cliff…

Tightening Your Belt

The government lost over $240 billion in revenue during the two year payroll tax cut period, and while their idea of putting that money back into the economy worked to some extent, now we all have to get used to having less cash to spend!  It is important for all of us to rework our budgets ASAP and readjust our cash flow needs.  This 6.2% payroll tax is here to stay!

 

 

 

 

 

 

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One Response to “The Skinny On Payroll Taxes”

  1. Betty says:

    “close to a thousand dollars less!” YIkes!!!! She must be making a boatload of money per paycheck then,– i mean that’s only a 2% difference. I was only missing 40 bucks.

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