ELMIRA, N.Y. (WETM) – President Trump signed an executive memorandum on August 8th, 2020, offering payroll tax deferral until the end of the year.
The deferral time frame applies to taxes on wages paid from September 1st, 2020, to the end of December of this year. But what does it mean for the average American?
According to the IRS, under the memorandum, employers can defer the withholding, deposit, and payment of the employee portion of the OASDI (Old Age, Survivors, and Disability) of FICA taxes — the 6.2 percent tax on employee wages.
Under Notice 2020-65, the payroll tax deferral is available to employees who have wages and compensation of less than $4,000 in a given biweekly payroll period from September 1, to December 31, timeframe, or an equivalent amount for other payroll periods.
For employers interested in this tax deferral, they may want to take a closer look at the fine print.
If a company does participate in the deferral and an employee quits, the employer will ultimately be responsible for paying the funds back in the end.
Local payroll tax companies say the plan for the deferral sounds good in the beginning but, Americans will pay in the end.
Its [basically] just pushing out when the taxes are going to be due. You get six percent waived off your [off your]pay roll taxes from now until the end of December. But then from January to April of next year, [you’re] just going to have to pay double on that, so instead of paying six percent, you’d be paying twelve percent. I would say if you can avoid it, I would avoid it, I understand some people’s hours have been cut, so if you’re making less money right now, you might need to do it.Bryan Gilbert, Marketing Specialist for GLN Tax & Payroll