Retired Navy Commander
- Sep 3, 2014
- Reaction score
- Pacific NW
- Political Leaning
Millions of workers could see smaller paychecks in the first few months of 2021 after the Treasury Department on Friday told employers they would be on the hook for the payroll taxes deferred under President Trump’s recent order.
The new guidance paints a sharply different picture from what White House officials have said for several weeks in response to Trump’s directive, which set in motion a plan to defer payroll taxes starting in September through the end of the year.
Payroll taxes, also called FICA tax, is the 7.65 percent that's withheld from employees' pay, regardless of income. It's withheld by the employer, who then forwards it to the IRS.
Trump's executive order pauses collection of the funds beginning September 1st through December 31st. But then it has to be paid back between January 1 2021 and April 30 2021.
So big pay "increase" just in time for the election, followed by big pay decrease next year.
I wonder how many low income families can easily handle this kind of manipulation of their income?
Smart businesses will ignore this ridiculous rule, and just keep withholding the tax and hold in on account until they can send it in next year for their employees. But what a headache for small businesses.