Trump’s Payroll Tax Deferral Gets Rolling
The IRS issued guidance late Friday that provides details on President Trump’s executive action to allow employers to stop collecting Social Security taxes for employees starting September 1 through the end of the year.
guidance, employers who choose to participate in the program will stop collecting the 6.2% payroll tax that is the employee’s share of Social Security taxes for the next four months for workers who earn up to $104,000 per year. The employers will then be required to collect twice as much from January to April next year.” data-reactid=”20″>According to the guidance, employers who choose to participate in the program will stop collecting the 6.2% payroll tax that is the employee’s share of Social Security taxes for the next four months for workers who earn up to $104,000 per year. The employers will then be required to collect twice as much from January to April next year.
According to Richard Rubin of The Wall Street Journal, a worker making $75,000 a year would save about $1,550 by December 31 – but then would owe the same amount in 2021.
said. “Employees would still owe the taxes eventually.” data-reactid=”26″>“The government’s action doesn’t actually change the underlying taxes, because only Congress can do that,” Rubin said. “Employees would still owe the taxes eventually.
Many businesses have expressed their doubts about the plan,
Federal News Network Monday. The deferral is expected to begin with the second paycheck of September, and will apply to those with gross Social Security wages of less than $4,000 per pay period.” data-reactid=”28″>Federal workers drafted into program. One employer that will participate is the government. “The federal government will implement an across-the-board payroll tax deferral by all federal payroll providers, so all federal employees who meet the income threshold will see savings,” a senior administration official told Federal News Network Monday. The deferral is expected to begin with the second paycheck of September, and will apply to those with gross Social Security wages of less than $4,000 per pay period.
Unions representing federal workers spoke out against the plan. “Either way, the employee loses,” said Randy Erwin, president of the National Federation of Federal Employees. “If the tax deferment becomes permanent, and provided it is legal, the employee could get a lower payout in retirement. If the deferment is temporary, the employee risks getting a huge tax bill plus interest and penalties early next year.”
Rep. Don Beyer (D-VA), whose district includes thousands of federal workers, also criticized the move. “The Trump administration’s plan to initiate payroll tax deferrals for civil servants treats the federal workforce as a guinea pig for a bad policy that businesses already rejected as ‘unworkable,’” he said. “This payroll tax deferral does not really put money in workers’ pockets, it simply sets up the members of the federal workforce who can least afford it for a big tax bill that many will not expect.”
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