News In The Work Force
Payroll Tax Deferral Program, is it right for you?
Is the Payroll Tax Deferral right for you?
Effective, September 1, 2020, the IRS implemented the Presidential Memorandum to IR-2020-195 https://www.whitehouse.gov/presidential-actions/memorandum-deferring-payroll-tax-obligations-light-ongoing-covid-19-disaster/ President Trump explained, “This modest, targeted action will put money directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most.” This will allow employers to defer withholding and payment of the employee’s portion of the Social Security tax, if the employee’s wages are below $4,000.00 during a bi-weekly pay period, including salaried workers earning less than $104,000.00 per year. Companies that choose to follow this tax deferral for their employees would be required to collect repayment of this tax obligation from employee paychecks from January 1, 2021 through April 30, 2021.
For now, this is only a tax deferral, not a tax forgiveness, for the purpose of providing immediate relief to those who have been struggling financially during the pandemic. Larry Kudlow, White House Economic Advisor has said, “We will take any steps possible to forgive this deferral” so employees would not be required to pay back tax amounts deferred through Dec. 31, The Hill reported. However, doing so would require new legislation. While President Trump wants to forgive the deferred taxes and turn it into a payroll tax cut, opponents want to block the deferral. Read more here https://thehill.com/policy/finance/515230-five-things-to-know-about-trumps-payroll-tax-deferral .