4 things you need to know about Payroll Tax Deferral
Last month, on August 8, 2020, a new memorandum was issued by President Trump to the Secretary of the Treasury addressing the deferral of certain payroll tax payments.
As you may know, under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) released on March 27th the Employer Payroll Tax Portion was addressed permitting employers to defer the deposit and payment of the employer’s portion of social security taxes from March 27, 2020 to Dec. 31, 2020.
Now, this new memorandum gives you the opportunity to defer the employees portion.
Down below we mention some of the things you should know about it:
- You can only defer the Employee portion of the Social Security and Medicare from September 1st to December 31st.
- It only applies to employees who do not exceed $4,000 gross salary every two weeks.
- As an employer is your decision if you want to offer this benefit to your employees.
- Payment for this deferral has to be made starting January to April 2021. Penalties and interest will accrue starting May 1st.
The purpose of this memorandum is to benefit the employee by taking home some extra money for the following months. If you decide as an employer to offer this, make sure your employees are aware of the advantages and disadvantages.
Read the complete announcement on the White House website here.
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