Payroll Tax Deferral Explained– it’s like a loan
Maurie Backman explains President Trump’ executive order calling for a payroll tax deferral from September – December 2020 for workers earning up to $104,000 per year. During this time, the 6.2% payroll tax normally deducted to fund Social Security won’t be applied to worker paychecks assuming their employers adopt the deferral, though some companies aren’t participating. Workers would have more take-home pay to look forward to between now and the end of the year. But that extra tax will be withheld in equal installments between Jan. 1 and April 30 of 2021. Any tax not paid back by that point will begin to accrue interest and penalties. Thus it is like a short-term loan. Backman explains that Trump would like the tax to be forgiven, but Congress would have to act for that to occur, and it appears unlikely. Full article here.