If you have employees (including owners), please take note of the following changes that go into effect January 1, 2013.
Colorado’s Minimum Wage Increase
Colorado’s minimum wage is increasing to $7.78 per hour effective January 1, 2013.
If you need a new poster to display at your workplace reflecting the new minimum wage, you can print one at no charge by clicking here: Colorado Minimum Wage Poster
Social Security Maximum Wage Base
The maximum amount of earnings subject to the Social Security tax increases to $113,700 in 2013. As in the past, there is no cap on the amount of earnings subject to the Medicare tax.
Payroll Tax Cuts to Expire
Unless Congress decides to extend the temporary 2% reduction in the employee’s portion of Social Security tax, this reduction is set to expire at the end of December 2012. Beginning January 1, 2013, the employee’s portion of Social Security tax will rise to 6.2% from the 4.2% reduced rate. The employer’s portion will remain unchanged at 6.2%.
Additional Medicare Tax
A new Additional Medicare Tax goes into effect starting in 2013. The 0.9 percent Additional Medicare Tax applies to an individual’s wages, Railroad Retirement Tax Act compensation, and self-employment income that exceeds a threshold amount based on the individual’s filing status.
The threshold amounts are:
- $250,000 for married taxpayers who file jointly,
- $125,000 for married taxpayers who file separately, and
- $200,000 for all other taxpayers.
An employer is responsible for withholding the Additional Medicare Tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year.
For additional information on the Additional Medicare Tax, you can visit the IRS’ questions and answers page: Questions and Answers for the Additional Medicare Tax
Please contact our CPA firm for more details or if you have any questions.