On August 8, 2020, President Trump signed an executive order to defer certain payroll tax obligations to provide additional COVID-19 relief. The order directs the Secretary of the Treasury to “use his authority to defer certain payroll tax obligations with respect to the American workers most in need”.
Details of the Payroll Tax Deferral
This payroll tax deferral applies to employee wages paid between September 1, 2020 and December 31, 2020, to those generally making less than $4,000 biweekly. The deferral applies to the withholding, deposit and payment the 6.2% employee Social Security tax, not the Medicare tax. The CARES Act did have a payroll tax deferral, but it was for the employer, NOT the employee.
What You Should Do
It’s important to note that the President is calling for a payroll tax deferral, not forgiveness, at least at this time. The Treasury is exploring avenues to eliminate the obligation to pay the taxes deferred.
We advise taxpayers to wait for more guidance and/or CARES Act 2.0 to come out before making any plans related to the effective date.
Our advisors are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed about potential impacts and benefits. Visit our COVID-19 Resource Center for more resources. To discuss your situation and recovery options, contact an Anders advisor below.
