Dear Taxpayers,
The new tax law signed by President Obama includes a provision to reduce the amount of FICA taxes paid by taxpayers during 2011. What are FICA taxes? There are two components, but for the sake of brevity, I will focus on just one; Social Security Tax. The amount an employee must pay in is equal to 6.2% of wages. The new tax legislation reduces this amount to 4.2% for 2011.
So how does this affect you, the average Joe? Well, let's say you earn $50,000 per year. The amount of social security tax that you would normally pay is equal to 6.2% X $50,000, or $3,100 for the year. If you are paid weekly, this equates to $59.62 per check. Now that the percentage required has been reduced to 4.2%, the weekly deduction will be just $40.38! $59.62 minus $40.38 equals $19.24.
Now, you might say, "big deal, it's just $19.24." Well, $19.24 per week over the course of one year equates to $1,000.24. That's right, I said $1,000.24!! Now, if you are married and your wife or husband earns roughly the same each year, were talking a few thousand bucks more in YOUR pockets this year. That's the kind of news that will help you have a great New Year!!
Blessings,
Ric the CPA
