Payroll Tax Deferment Info
Published Thursday, September 3, 2020 8:00 am
You’ve likely heard about the payroll tax deferment that President Trump signed in early August. If you haven’t read up on the details, here are highlights of the program:
- The IRS is allowing employers to defer the social security portion (6.2%) of an employee's paycheck from September 1 through December 31, 2020, if the employee makes less than $4000 every two weeks.
- This deferral is completely optional by the employer. If the employer opts to participate, all employees must defer. Employees cannot pick and choose.
- Beginning January 1, 2021, through April 30, 2021, the employer must begin to collect the deferred social security back from employees in addition to withholding the normal 6.2% from the employees’ paycheck again.
- Employees will pay 12.4% more beginning January 1, compared to what they were paying in December.
- The full amount is due to the IRS by the employer on April 30, 2021. This is regardless of whether or not the money has been collected from employees. This is a huge potential liability for employers.
- Anything unpaid after this date will incur interest and penalties from the IRS.
- If an employee quits or is terminated before the amount is collected, the employer is still liable for the deferred tax.
- Currently, there are no talks going on in Congress to forgive this deferment.
Again, as the employer, it is your decision whether or not to defer. We recommend that you discuss this with your payroll vendor, accountant, or business advisor if you are unsure of your course of action. If we can assist you in any way, please let us know.