Where's My Payroll Tax Cut?
My husband, who gets paid monthly, noticed that his January paycheck wasn't any larger. "Wasn't I supposed to start seeing a bigger check because less money would be withheld for Social Security?" he asked (see Tax Cut Help for the Math Challenged).
Part of the tax deal hammered out in late 2010 was a two percentage point cut (from 6.2% to 4.2%) in the employee share of the Social Security tax. The lower rate was supposed to kick in in January. But not all employers had enough time to reprogram their payroll systems. Apparently my husband's employer was among those that didn't get their systems updated in time for January paychecks.
The IRS has given employers until today (January 31) to make the necessary changes. So if you didn't see a tax cut in your January paycheck, you should see twice as much added back to your February paycheck to correct for overwithholding in January. Use our calculator to see how much your paycheck will rise each month -- and double that amount for February if you didn't see the tax cut in January.
If you don't see a change to your February paycheck, talk to your human resources department. Don't assume that your income is too high for the payroll tax cut. This cash-to-taxpayers stimulus applies to workers at all income levels -- unlike the Making Work Pay credit, which phased out as income rose between $75,000 and $95,000 for single filers and between $150,000 and $190,000 for couples who filed joint returns.