Payroll Tax Deferral: What You Need to Know

Among the items included in President Trump’s series of executive orders in early August was an order directing the U.S. Treasury to allow employers to stop collecting Social Security and Medicare payroll taxes through December 31 for workers making less than $4,000 on a biweekly basis (roughly $104,000 per year).

It’s worth noting that the tax obligation is simply deferred, not forgiven, so an employer will need to collect those remittances after the first of the year. Each employees’ tax obligation needs to be paid by April 30, 2021, or accrue steep penalties and interest. That means that an employee’s take-home pay in early 2021 will likely shrink as an employer collects double what they would typically owe.

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