Employers in U.S. Start Bracing for Higher Tax Withholding
Posted by iusbvision on October 28, 2010
$250,000 a year huh …. well even if you are in the bottom tax bracket your income tax rate will go from 10% to 15%. This is a part of the uncertainty we have all been talking about. By the way soon your payroll taxes will go up too. Many small to medium sized business that use the personal income rates rather than the corporate ones will have their rate go to 39.9%. But hey, Google only paid 2.4% tax this year.
“I’ve been doing payroll for probably close to 30 years now, and never have we seen something like this where it gets that down to the wire,” said Dennis Danilewicz, who manages payroll services for about 14,000 employees at New York University’s Langone Medical Center. “That’s what’s got a lot of people nervous. All we can do is start preparing communications with a couple of different scenarios.”
Lawmakers won’t start debating whether to extend the cuts, which expire Dec. 31, until after the Nov. 2 elections. Because it takes weeks to prepare withholding schedules, the Internal Revenue Service will probably have to assume the cuts will expire and direct employers to increase payroll deductions starting Jan. 1, experts say.
“We’re kind of stuck between a rock and a hard place,” said Ron Moser, head of human resources for the school district of Kenmore-Town of Tonawanda, New York, which pays about 1,900 teachers, custodians and aides each month. In upstate New York, where winter heating costs are among the highest in the country, many school employees earn between $20,000 and $40,000 a year, he said, and losing $50 in a paycheck is “a significant dollar amount.”