What You Need to Know About the Deferral of Payroll Tax Obligations
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)
Contact us so we can help you to understand the impact of the payroll tax deferral on your organization.
Sign Up for Email Updates
Accounting & Financial News
Can Your Manufacturing Company Benefit From the Work Opportunity Tax Credit?
The quest for skilled laborers in the manufacturing sector continues. Indeed, more than 600,000 manufacturing-related jobs remained…
Help Staffers Boost Retirement Savings With a Roth 403(b) Plan
For-profit businesses with 401(k) retirement plans can offer Roth 401(k) plans to their employees. Likewise, not-for-profits can…