One of my clients who does their own payroll through QB recently paid salaries on 1/4/13. This is done on a bi-weekly basis, so the pay periods were for the time from 12/22 - 12/28 and 12/29 - 1/4/2013. QB withheld the increased amount of 2% of FICA on the entire check. Is this correct? No adjustment for the pay period in 2012?
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The applicable tax rates (FICA, IT, etc) are based upon date paid, not date(s) incurred.
Reg ยง31.3402(a)-1
(b) The employer is required to collect the tax by deducting and withholding the amount thereof from the employee's wages as and when paid, either actually or constructively. Wages are constructively paid when they are credited to the account of or set apart for an employee so that they may be drawn upon by him at any time although not then actually reduced to possession. To constitute payment in such a case, the wages must be credited to or set apart for the employee without any substantial limitation or restriction as to the time or manner of payment or condition upon which payment is to be made, and must be made available to him so that they may be drawn upon at any time, and their payment brought within his own control and disposition.Last edited by smithtax; 01-08-2013, 01:53 PM.EAnOK -
No adjustment
There should be no adjustment for last year's wages. The new rates apply to when the wages are PAID (not earned). In this case they were paid in 2013.Comment
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Minimum Wage
Sorry, for using your thread, Burke. I just went through this with an employer. What also confused me for a moment was when minimum wage increases are applicable. Logic told me that this will be done on a day by day basis, meaning that a pay period will have two different pay rates. Everyone agree?Comment
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ChEAr$,
Harlan Lunsford, EA n LAComment
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Yes, Montana
...sorry, yes, Montana.Comment
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