What You Need to Know About the Deferral of Payroll Tax Obligations

Kirsch CPA Group

Sep 15, 2020

Our office has received numerous inquiries about President Trump’s recent memorandum. On August 8, 2020, President Trump signed an executive order allowing an elective deferral of the 6.2% employee share of Social Security tax. The deferral period runs September 1, 2020 to December 31, 2020. The deferral is only available to employees who have bi-weekly pay less than $4,000 or $104,000 on an annual basis.

The decision to defer the payment of the employee’s share of Social Security tax rests with the employer and is not mandatory. At this point, it appears implementation and administration of the payroll tax deferral may outweigh the benefits. Here are the details for you to consider:

The deferred social security tax will be repaid during the time period ranging from January 1, 2021 to April 30, 2021 via remittance by the employer
The employer is required to withhold additional payroll tax withholdings from the employee to pay the deferred amount
There are many unanswered questions pertaining to the deferral of payroll taxes. (i.e. who is obligated to re-pay the deferred portion if an employee terminates employment)

More Resources

Guide: Next Level Accounting Services for Your Growing Business

Guide: Build a Better Business by the Numbers

Case Study: Strategic Accounting Support from Acquisition to Sale

About The Author

Kirsch CPA Group is a full service CPA and business advisory firm helping businesses and organizations with accounting,…

info@kirschcpa.com

Sign Up for Email Updates

Accounting & Financial News

Looming Tariff Threat Has Trucking Industry Anticipating a Difficult Road Ahead

Many transportation industry business owners who are scrambling for ways to fortify their businesses have few options for minimizing the…

Maximize the Ohio Scholarship Granting Organizations (SGOs) Tax Credit

Scholarship Granting Organizations (SGOs) provide need-based scholarships to students attending private schools. In Ohio, taxpayers who donate to SGOs may…

FinCEN Interim Final Rule Significantly Reduces BOI Reporting Requirements

On March 21, 2025, the Financial Crimes Enforcement Network (FinCEN) announced significant updates to Beneficial Ownership Information (BOI) reporting requirements…

Frequently Asked Questions

How can I manage cash flow better?

Good cash flow management and forecasting are essential for maintaining the financial health of your business. Having a rolling 12-month forecast of revenues and expenses helps you proactively avoid shortfalls and capitalize on opportunities. Learn more >

How can my business benefit from outsourced CFO services?

Outsourced CFO services, also known as fractional or virtual CFO services, let small and mid-size businesses leverage the deep financial expertise and strategic insights needed to accelerate growth and profitability for a fraction of the cost of hiring a full-time CFO. Key offerings include profitability analysis, cash flow forecasting, KPI benchmarking, and budgeting. Learn more >

How can I ensure that I don’t pay more taxes than necessary?

Effective tax planning involves leveraging all available tax credits, avoiding unpleasant surprises, keeping up with changes in the law, and ensuring you pay only your fair share. Learn more >

How can a CPA firm increase the profitability and value of my business?

When you partner with an accounting firm that offers advisory services, you will have the clear financial visibility needed to confidently make big decisions and drive profitable growth for your business. Learn more >

What should I look for in an outsourced accounting firm?

Growing a business requires more than tax preparation and basic accounting services. You need a holistic and forward-looking approach to your financial health. For best results, look for a partner who employs a proven process and a diverse range of services tailored to optimize cash flow, increase profitability, and maximize the value of your business. Learn more >

Recent Posts