What is Payroll Tax Deferment?
An executive order was made to defer collecting certain payroll taxes from the beginning of September until the end of 2020. Employers will be able to defer payroll taxes that help pay for Social Security and Medicare. Taxes will be deferred without any penalties, interest, additional amount or addition to the tax. The goal of the deferral is to offset economic impacts of the coronavirus.
Who is Eligible to Receive the Tax Deferment?
Employees who earn less than $4,000 during any bi-weekly pay period ($104,000 annual salary) on a pre-tax basis.
Important Considerations for Employers
Timeframe to implement changes to your payroll process due to quick turnaround on federal guidance
The possibility that the deferred taxes will need to be collected at a future date
Employers need to determine the benefits of releasing affected taxes of eligible employees against the possibility of having to recoup taxes later.
Our team is continually monitoring guidance from the Department of Treasury. Please let us know if you have any questions or need assistance with Payroll Tax Deferment.