If widespread news reports are any indication, many people—employers and employees alike—are thinking about increased taxes in 2013 and what can be done to minimize their impact.
Some tax increases in 2013 are a sure thing. For example, the employee share of Medicare taxes will increase to 2.35% for wages in excess of $250,000 (for married individuals filing jointly), $125,000 (for married individuals filing separately), and $200,000 (in any other case).
But, even as the end of the year looms, it is unclear whether other potential tax increases will take effect. If the so-called Bush tax cuts expire, income tax rates will increase. If the “payroll tax holiday” is not extended, the employee share of Social Security taxes will increase to 6.2% from its current 4.2%.
Due to the uncertain tax landscape for 2013, employers may wish to consider accelerating certain payments and awards into 2012 when taxes will generally be lower. However, in so doing, employers should be careful to avoid certain potential pitfalls.
Continue Reading Accelerating Compensation into 2012 to Avoid 2013 Tax Increases