- August 12, 2020
- Posted by: Andy Scheu
- Category: Payroll
What’s New?
Over the weekend, President Trump issued an executive memorandum that will give employees the option to suspend the collection of their Social Security payroll taxes. This option will be made available to employees making less than $4,000, pre-tax, over a bi-weekly pay period. The Social Security tax deferral will go into effect on September 1st, and last through the end of 2020.
Congress has yet to rule on whether or not the deferred taxes will be forgiven entirely, or if employers and/or employees will be responsible for paying these taxes at a later date.
Time & Pay is monitoring the situation, and will help provide guidance to clients after more concrete decisions have been made by congress and the Dept. of the Treasury.
Update: 8/27/2020
As of 8/27/2020, there has yet to be any further guidance as to whether or not these payroll tax deferrals will be forgiven, or if the employee will owe the deferred taxes in 2021. At this point, Employers are not obligated to offer the payroll tax deferral to their employees, and may choose not to in order to help their employees avoid a larger tax bill come tax season.
Update: 9/15/2020
Indications are that it will be the employer’s responsibility to pay back all deferred payroll through payroll by withholding additional funds from participating employees’ paychecks from 1/1/2021 – 4/1/2021. Interest and penalties will begin to accrue on unpaid taxes starting May 1, 2021. Employers are not required to offer the payroll tax deferral to their employees, although some federal employees have been forced to participate in the deferral program.
