Per the IRS, "the temporary payroll tax cut has been extended to Feb. 29. Thus during this time, employees will enjoy a continued tax savings of 2% of wages withheld for Social Security, that is, from 6.2% to 4.2%."

Also, the Social Security wage base for 2012 is $110,100 up from $106,800 in 2011, representing an increase of about 3% from the prior year. This means that once a taxpayer's wages exceed this amount, Social Security will not be withheld however, there will be no limit on the amount of Medicare that will continue to be withheld.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.

The IRS has few fans. Though a lot of people do not realize it at first, the political expediency of cutting the IRS budget is coming back to bite taxpayers where it hurts. Believe it or not, cutting the budget of the Internal Revenue Service is actually a bad idea. The agency has fewer resources to work with, making it that much tougher to work with taxpayers. Source for this article: IRS budget cuts costing taxpayer.