Greg: This is PKF Texas, the Entrepreneur’s Playbook. I’m Greg Price, Director of Consulting Solutions, and I’m here again with Tina Winograd, a payroll specialist in our accounting department at PKF Texas. So, Tina, last time you were here, we talked a little bit about taxes. Let’s do a little bit further drill down – Social Security and Medicare. What’s happening with them in 2013?
Tina: For next year, 2013, the Social Security taxable wage base is going to rise to $113,700.00. The temporary tax holiday that we’ve enjoyed for the past two years is due to expire at the end of this year. That means that the two percent reduction will come back to the Social Security, making it 6.2 percent, and that’s if Congress doesn’t do anything to extend the time limit.
Greg: Wow. So, now, I’ve also heard an additional tax for highly compensated employees. Can you shed a little light on what that is?
Tina: Yes. In 2013, there’s going to be a new Medicare tax. After an employee reached $200,000.00, an additional .9 percent will be added to their Medicare, taking the rate from 1.45 to 2.35.
Greg: Okay. Now, with that increase, what’s the impact of that going to have on employers? Are they going to have to pay that as well?
Tina: Well, there is some good news from the tax front end. The additional tax is for the employee only. The business operators do not have to be subject to the tax.
Greg: Wow. Thank you very much for sharing that. That was very important. I know a lot of our clients will be asking those questions. We’ll have you back to talk some more about payroll taxes and related items.
Tina: Great.
Greg: This has been another Thought Leader production, brought to you by PKF Texas, the Entrepreneur’s Playbook. Tune in next week for another chapter, and if you’d like to get more information about Medicare and Social Security taxes, go to www.pkftexas.com/taxnews.