If your company does its own payroll, make sure you have reimbursed any 2011 Social Security taxes that may have been overwithheld to your employees by March 31.
The Social Security tax rate was temporarily lowered from 6.2 percent to 4.2 percent as of January 1, 2011 by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. As a result, in 2011, employees pay 4.2 percent Social Security on wages up to $106,800 (the Social Security wage base limit). The employer tax rate for Social Security remained unchanged at 6.2 percent.
When the Act was signed by the president, employers were asked to implement the 4.2 percent employee Social Security tax rate as soon as possible but not later than January 31, 2011. Employers were also instructed to make an offsetting adjustment in a subsequent pay period to reimburse employees for any 2011 Social Security taxes that had been overwithheld as soon as possible, but not later than March 31. 2011.
If your company was delayed in implementing the reduced Social Security tax withholding schedule, make sure that your payroll system has reimbursed employees for the extra two percent that was overwithheld.