Payroll Tax Guidance

originally posted by: Middleoftheroad
If you’re worried, just have your employer withhold that money from your paycheck. It was and still is an option for employees, even before this EO.

You can have additional FWH (which must be deposited as collected), there is no provision for additional FICA.

It's possible that an employer can allow opt in/out for their employees on an individual basis but the bookkeeping would be problematic.

a reply to: xuenchen

Somebody just told me this irs-n-20-65 pertains to Employers not Employees

That would be me?
www.abovetopsecret.com...

a reply to: Phage


Lemme try and get this straight, I may need help here. So in other words basically ( Basically cause I'm a crayon eating jarhead) If my employers decide to not with hold money from my payroll check I will end up with more of my earnings but later down the road I will be responsible come say tax time my return will reflect a debt? Also to add that if my employer chooses to do this to our company then I don't have a choice but to go along with it?

Is that what is basically being said here?

a reply to: Phage

Nice edit just in time 😎🚬

a reply to: xuenchen

Bull# from you, as usual.

a reply to: Brotherman

Sort of. Except for the part about "tax time." It is up to the employer to start making up the difference by withholding more from your paycheck beginning January. How much more is unspecified.

The "guidance" is silent about an employee's options.

originally posted by: Phage
a reply to: Brotherman

Sort of. Except for the part about "tax time." It is up to the employer to start making up the difference by withholding more from your paycheck beginning January.

The "guidance" is silent about an employee's options.

I'm not sure I can stand by this, I have a hard enough time trying to figure out all the other BS the government throws at me with health care laws, insurance nightmares, all the crap involved in trying to be a first time home owner. If I can't understand why and no one knows about the little guys options then I am at a loss of words for my lack of understanding what or who this is supposed to benefit.

Who is this supposed to benefit?

a reply to: Brotherman

Who is this supposed to benefit?

My guess is that it is supposed to enhance Trump's chances of re-election, "Look! I made your paycheck bigger!"

After the election it doesn't matter. Except to those who may not understand what a deferral is.

Don't spend the money.

I work with payroll, as of Friday 8/28/2020 I was informed that the tax that can be deferred is the employee portion of the Social Security tax, which is 6.2% of your gross.

From what I was informed and this is all brand new- as of this moment it's a deferral.

If an employee decides to defer this tax (a company can't make that decision for anybody), the employee (not the company) will be responsible to pay it back eventually. Nobody knows when it is due back or in what manner it will be paid back (will it be a bill sent to the employee or will they add another payroll tax for those employees who deferred, etc).

But lets speculate: if an employee makes 50k in a year and has deferred all year- the amount owed back would be $3,100. If payments are late, there's a good chance penalty and interest will be tacked on.

On the other hand if this payroll tax is forgiven- if an employee has made 50k and paid into it all year, then they should expect a credit of $3,100, right? Because everybody should get the credit and not just the people who chose to defer at that point- maybe brackets would be applied but everything within a certain income bracket should also get the credit.

Now consider the two options and decide for yourself which is better- defer now and get billed later... with a possible forgiveness (but maybe not). Or continue to pay it and possibly get a check/credit later?

Which is better, getting billed or getting a credit?

It's an easy decision for me. Not that unlike how imo a 401k Roth is better, pay the taxes now because you never know what it could be in the future. I'd choose the possible credit over the possible bill- just my take on it.

I was informed that many people are confused over the matter and a lot of people are saying a lot of different things so... just putting this here. Just FYI, from what I was informed, Trump put out a memorandum promising to have this payroll tax forgiven (so nobody owes it back) if he's elected and serves again- however it still has to pass through congress.

a reply to: geezlouise

If an employee decides to defer this tax (a company can't make that decision for anybody)

Where, in the guidance, is this stated?

a reply to: Phage

I'm just telling you what I've been informed of. As of right now, it's not a law that this tax must be deferred. An employee has to choose to have this tax deferred- and a company can not make that decision for their employees. I know there is confusion in regards to that as well.

I'll be dealing with this of course as it's part of my job. If anything changes, I'll be sure to let you know.

a reply to: geezlouise

An employee has to choose to have this tax deferred- and a company can not make that decision for their employees.

That makes no sense. If an employee opts for the deferral then quits on December 31st, the employer is responsible for the deferred amount.

If necessary, the Affected Taxpayer may make arrangements to otherwise collect the total Applicable Taxes from the employee.

Trump put out a memorandum promising to have this payroll tax forgiven (so nobody owes it back) if he's elected and serves again- however it still has to pass through congress.

And he won't have another election to worry about.

a reply to: Phage

If an employee quits, whenever those taxes which were deferred are due- the government tax agency will have to collect from the ex-employee themselves. That's what I meant when I said we don't know how these future payments will be applied- it could be a bill that you get in the mail with payment options, or there could be a new payroll tax applied (or something like a garnishment)for those employees who deferred, nobody knows right now.

The company will of course have something to show for the employees who deferred taxes when they file(and we don't know yet how that will be done either).

Yeah, thinking about it right now... a company could commit a lot of fraud here (saying that all of their employees chose to defer but in fact keeping the funds withheld). There's a lot of room for a lot of future sh-t storms!

Your guess was my first guess as well, Trump is trying to get more votes.

a reply to: Phage

The IRS got around to issuing “guidance” on the president’s order regarding deferral of Payment of Social Security and Medicare taxes.
www.irs.gov...

As of next payday, we can stop withholding from paychecks (a total of 7.65% of wages) through the end of the year. However, beginning January 1, we will be required to start making up for the deferral by April 30, presumably by bumping the withholding amounts.

Employees may be expecting more money in their paychecks, but I don’t think that this is a really good idea for them or a company. If any employee is lost before the deferral is covered the company may be on the hook for the amount due.

Thanks for posting the info. I was just talking about this issue with my lady today, so your timing is sublime.


I guess we'll all see as this plays out.

And in typical IRS fashion, it wouldn't surprise me a bit if they also penalized people for not having enough taxes taken out during this period. The reason? Because at the end of the year the total tax due is still going to be the same. So unless congress directs the IRS to forego that penalty, plan for that as well.

We got bit with that very penalty for having to have the ACA for three months last year. The IRS said since we didn't have additional money taken out of our paychecks to reimburse the amount that was waived for the ACA cost based on my income at the end of 2018, we owed a penalty on top of the three grand we had to "pay back".

a reply to: Phage

I’m so glad I’m already retired. This stuff just makes my head spin. SMDH

a reply to: ChiefD

Perhaps you should pay more attention.

a reply to: HalWesten

And in typical IRS fashion, it wouldn't surprise me a bit if they also penalized people for not having enough taxes taken out during this period.

The only penalties mentioned are in regard to employers.

An Affected Taxpayer deferred under this notice must withhold and pay the total Applicable Taxes that the Affected Taxpayer deferred under this notice ratably paid between January 1, 2021 and April 30, 2021 or interest, penalties, and additions to tax will begin to accrue on May 1, 2021, with respect to any unpaid Applicable Taxes.

If the employer doesn't make up the difference by May 1, watch out. I have a hunch a lot of employers won't be taking part since there does not seem to be a requirement that they do so.

But if in between now and then, Congress decided to adopt the Fair Tax system or another means of taxation than the current system...then there would be no repayment.


Or if Congress stopped taxing income altogether because property in excess of $20 needs due process to be confiscated Constitutionally in the first place...and no the amendment did not override that part because it didn’t grant an exemption of jurisprudence.

a reply to: Ahabstar

This is not income tax.
There is no change to income tax withholding.