Social Security Tax Deferral for Employees

Posted by tim  at August 31st, 2020

a Presidential Memorandum, effective Sept 1, 2020   

 Summary 

Employers may defer the withholding and payment of Social Security taxes from employee wages from Sept 1, 2020 through Dec 31, 2020. This deferral applies to employees earning less than $104,000 per year.

This is a tax deferral, not a tax cut. However, there is some optimism that Congress will still pass a law to cut or forgive this tax, in which case, employers would not have to do backup withholding in 2021.

We recommend that employers communicate their intention of whether or not they will take advantage this tax benefit.

Contact CleanBooks for assistance in navigating this payroll tax deferral executive memo.

Links

1. Executive Memo: (Aug 8, 2020): https://www.whitehouse.gov/presidential-actions/memorandum-deferring-payroll-tax-obligations-light-ongoing-covid-19-disaster/
2. IRS Guidance (Aug 28, 2020): https://www.irs.gov/pub/irs-drop/n-20-65.pdf
3. News articles:
   • https://www.foxbusiness.com/money/what-does-trumps-payroll-tax-deferral-mean-for-you
   • https://www.forbes.com/sites/advisor/2020/08/31/how-trumps-payroll-tax-holiday-will-work/#7fbbfb9f1f13