Payroll Tax Cut Bill Rejected by the House

On Tuesday, December 20th, House Republicans rejected the Senate’s two month extension of the payroll tax cut bill.  The rejection occurred just 11 days before the payroll tax law is set to expire.

payroll tax

payroll tax

If you recall, the Senate passed the payroll tax bill extension for two months to give the Democrats and Republicans time to come to an agreement on other tax and non-tax related provisions attached to the bill.

The payroll tax extension would keep Social Security tax at 4.2%, extend unemployment benefits, and prevent cuts to doctors’ medicare payments until a compromise was reached and the bill was extended for a longer period.

There is no guarantee that there will be a compromise from the House of Representatives, but there is hope that pressure from the President and the Senate will further encourage an extension of the payroll tax bill by January 1.

If the payroll tax is not extended, the typical family making $50,000 per year, will lose $40 per paycheck, 3 million people who receive long-term unemployment benefits will see a drop in benefits, and Medicare payments to doctors will be lowered.

How would a $40 loss per paycheck impact you and your family?  What could you do with $40 per paycheck?

TurboTaxLisa

Lisa Lewis is a CPA and the TurboTax Blog Editor. Lisa has 15 years of experience in tax preparation. Her success is attributed to being able to interpret tax laws and help clients better understand them. Lisa also has been a TurboTax product user for many years and understands how the software program works. In addition to extensive tax experience, Lisa also has a very well-rounded professional background. She has held positions as a public auditor, controller, and operations manager. Prior to becoming the TurboTax Blog Editor, she was a Technical Writer for the TurboTax Consumer Group and worked on a project to write new FAQs to help customers better understand tax laws. She could also be seen helping TurboTax customers with tax questions during Lifeline. For Lisa, getting timely and accurate information out to customers to help them is paramount.

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