Fiscal Cliff Essay

990 WordsJan 21, 20134 Pages
Review of ‘Fiscal Cliff’ Law Affects Payroll Tax Withholding and Employee Benefits By Lisa K. Johnson Benefits Professor Brian Nesbit At the beginning of this month, our Congress was faced with a financial crisis beyond comprehension. The “fiscal cliff” was very near and decisions needed to be made. Some of the decisions made have had an impact on employee benefits and Human Resources, specifically the payroll department. This article, ‘Fiscal Cliff’ Law affects payroll tax, withholding and employee benefits, written by Stephen Miller, CBES goes into detail about the American Tax Relief Act of 2012, which passed by congress on January 1, 2013 and signed into law January 2, 2013. This act extends tax provisions that had already expired, revises tax rates on incomes for married couples, and extends unemployment benefits. It affects 401k accounts, transfers, disbursements, and taxes involved with 401 and Roth accounts. It sets up deadlines for when payroll must have the changes in effect. This act allows for additional time for lawyers to negotiate on the deficit. How this law affects Human Resources and Employee Benefits Employers offer all sorts of benefits for many reasons. One of those reasons is to “receive favorable tax treatment by reducing the taxable income and to avoid competitive disadvantage by attracting and retaining the best qualified employees (Employee Benefits, 4th Ed.). If a company can offer better benefits than its competitors it will attract and be able to retain employees who are more likely to stay with that company, reducing the cost of hiring and retraining new employees. Payroll is affected by this as a new withholding tax table will be used and the payroll department has a deadline in which this must be implemented. Employees will see more money being deducted for Social Security Tax but other benefits will

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