Recently, legislators came through at the last minute, passing a comprehensive tax relief act just in time for the new year. The tax implications of the relief act were among the first issues addressed, with tax agencies like the Internal Revenue Service issuing new guidelines for employers.
Under the new regulations, employers will be required to follow new withholding guidelines no later than Feb. 15. Payroll groups say that most American businesses should be able to easily comply with that deadline, though some complications may arise. Individual workers will now be subjected to a 2 percent increase in withholding for Social Security, according to the Obama administration. That change seems minor, considering the $500 billion that was at stake if the nation plunged off the fiscal cliff.
Other changes to the tax law included modifying the top tax rate on income of more than $450,000 for couples and $400,000 for single filers. The top tax rate on capital gains has also been raised, which should provide additional benefits to those in the lower categories of affluence.
The change has brought a slew of questions from private filers and employers alike, with some worrying that they will not be in compliance with the tax code in time. This is partially because the IRS is not opening its electronic filing system until late January, a departure from its traditional early-January launch.
Experts now say they anticipate the tax season to proceed without significant challenges. This will be welcome relief, they report, because many financial professionals were fretting about potential tax changes.
When changes happen in regards to law, compliance is key in order to avoid legal problems.
Source: NASDAQ, “IRS quick to issue withholding rules after tax deal,” Jan. 3, 2013