Effective 9/1/2020 President Trump, through an executive order, has a NEW payroll tax deferral of 6.2% of your gross W2.
- This is your employEE Social Security tax and can be ‘deferred’ 9/1/2020 – 12/31/2020.
- The catch is that you will then have to ‘pay it back’ with extra withholdings 1/1/2021 – 4/31/2021.
- The choice to do this by an employER is an individual business choice. And each employee can opt out if they don’t want to do this.
- Trump says he will ‘try’ and have this ‘maybe’ not be repayable. Currently, that is discussion and talk only… not the law. It requires Congress to change this to a permanent situation.
- It is my opinion that this is fraught with problems since the IRS has stated that the employER must pay the tax back regardless if you were able to get the funds withheld from the employee in the future.
- What if the employEE no longer works for you?
- What if the employEE forgets about this original “gift” and blames you for this extra withholding?