Payroll Taxes

Social Security payroll taxes are collected under authority of the Federal Insurance Contributions Act (FICA). The payroll taxes are sometimes called "FICA taxes".
FICA is nothing more than the tax provisions of the Social Security Act, as they appear in the Internal Revenue Code.

The Social Security Act was signed by President Franklyn D. Roosevelt on 8/14/35.
Taxes were collected for the first time in January 1937 and the first one-time, lump-sum payments were made the same month. Regular ongoing monthly benefits started in January 1940.

Medicare was passed into law on July 30, 1965. Beneficiaries were first able to sign-up for the program on July 1,1966.

Until June 2011, The first three digits are assigned according to the geographic region in which the person was residing at the time he or she obtained a number. Generally, numbers were assigned beginning in the northeast and moving westward. The remaining six digits in the number are randomly assigned.
Social Security is changing the way Social Security numbers (SSN) are issued. This change is referred to as “randomization.” Social Security is developing this new method to help protect the integrity of the SSN. SSN Randomization will also extend the longevity of the nine-digit SSN nationwide.
Social Security plans to implement the new assignment methodology on June 25, 2011. SSN randomization will affect the SSN assignment process in the following ways: n It will eliminate the geographical significance of the first three digits of the SSN, currently referred to as the area number, no longer allocating the area numbers for assignment to individuals in specific states. n It will eliminate the significance of the highest group number and, as a result, the High Group List will be frozen, but can be used for validated SSNs issued prior to the randomization implementation date. n Area numbers previously unassigned will be introduced for assignment excluding area numbers 000, 666 and 900-999.

Redesigned Form 940 replaces previous Form 940 and Form 940-EZ. We have replaced both Form 940-EZ and Form 940 with a new simplified Form 940. If you filed Form 940-EZ before, you must now use the redesigned Form 940.

There are two Internet verification options you can use to verify that your employee names and Social Security numbers match Social Security's records.
You can: Verify up to 10 names and SSNs (per screen) online and receive immediate results.
This option is ideal to verify new hires.
Upload overnight files of up to 250,000 names and SSNs and usually receive results the next government business day.
This option is ideal if you want to verify an entire payroll database or if you hire a large number of workers at a time. While the service is available to all employers and third-party submitters, it can only be used to verify current or former employees and only for wage reporting (Form W-2) purposes. Register to Use the Social Security Number Verification Service (SSNVS) - at www.ssa.gov/bso/bsowelcome.htm.

The IRS reminds employers that the Federal Unemployment Tax Act surcharge of 0.2% expired on June 30, 2011.
This means that the FUTA rate for employers decreased from 6.2% to 6.0% starting on July 1, 2011.
The IRS revised Form 940, Employer’s Annual Federal Unemployment Tax Return, to accommodate the two different rates
The surcharge was originally enacted in 1976, and Congress has extended it several times since. Unemployment benefits are not tied to the surcharge, so the expiration of the surcharge will not affect current or future unemployment benefits.

Elective deferrals from retirement plans and adjustments or deductions are listed with a code and an amount in Box 12.
CODES:
A = Uncollected SS or RRTA tax on tips
B = Uncollected Medicare tax on tips
C = Taxable cost of group life insurance over 50K
D through H,S,AA,BB,EE = Elective Deferrals and Roth contributions
J = Nontaxable sick pay
K = 20% excise tax on golden parachute payments
L = Employee business expense reimbursements
M = Uncollected SS or RRTA tax on life insurance
N = Uncollected Medicare tax on life insurance
P =excludable moving expense reimbursements
Q =Nontaxable combat pay
R = Employer contributions to Archer MSA
S = salary reduction under 408(p) Simple
T = Adoption benefits
V= income from stock option
W = HSA employer contribution
Y = 409A deferral
Z = 409A income
AA = Roth contribution under 401(k)
BB =Roth contribution under 403(b)
DD = employer health coverage
EE =Roth contribution under 457(b)

The amount of the elected non-taxable deferral is reported On Form W-2 in box 12. Enter the code of D and the section 401(k) amount. Do not include this amount in the W-2, box 1, Taxable wage amount.