Ready For Your Payroll Software Update?

SEWilco writes "A federal payroll tax reduction for two months is being pushed by the President. Paying less money to the government seems good, but if the law is changed it will change the payroll taxes in January and February. Many of us can well imagine what that will do to the many payroll systems which are already programmed with the 2012 tax rates."

Anti-cyclic thinking

[captainpanic]

It's fine to do some anti-cyclic economy... and I understand the merits.

But wasn't it the idea that you reduce expenses in boon times, and go anti-cyclic, and thereby spend more in bad times?
But the last decade, the USA has clearly acted cyclic, not anti-cyclic. The US has spent money like its life depended on it (and many thought it really did, with terrorists lurking in every corner of the world, all aiming to bomb the US back into the Middle Ages).

It's surprising to see that there is even more money available... and it makes me wonder who will go down first in economic terms: the EU, or the USA.

more October filings for IRS

[peter303]

The December 2010 tax changes meant several official IRS forms were not available until February or even March. A lot of this had to do with basis information now mandated on brokerage 1099s. So the old habit of filing in early February for anticipated refund becomes less possible. Even April filing is threatened by lack of forms and data. More people get the automatic October extension tax-preparers tell me.

Re:For two months?

[emurphy42]

This. More specifically, Googling (2012 Social Security tax cut) leads to http://www.foxnews.com/politics/2011/12/20/payroll-processors-say-two-month-fix-undoable/ [foxnews.com]

According to the proposed law, the two-month extension of a 4.2 percent taxable wage is applied only to the first $18,350 of income. Wages exceeding $18,350 paid during the first two months of 2012 would be subject to a 6.2 percent Social Security tax rate.

Yes, any decent payroll software has tax table updates, but they don't all support multi-tier rates like this. I consult on an accounting suite with a payroll module, and they had to release a full-on code patch this year to support a change in Connecticut that took effect in August, whereas they usually just release simple updates that save you the trouble of hand-entering all the new rates.