Payroll tax deferral will be a mess

[Thrif-t]

Do you think companies will tell their employees if they are going to do this? I've heard nothing from mine and would hope they just pass. What a mess! I didn't realize you were going to be double taxed come January to make it up, I thought you had to pay it back come tax time in April.

[Petunia 100]

Do you think companies will tell their employees if they are going to do this? I've heard nothing from mine and would hope they just pass. What a mess! I didn't realize you were going to be double taxed come January to make it up, I thought you had to pay it back come tax time in April.

One would think that a company would let you know. You will be able to tell for sure when you get your first paycheck which includes days in September.

[disneysteve]

One would think that a company would let you know. You will be able to tell for sure when you get your first paycheck which includes days in September.

I've also read that some companies are letting you opt out of the deferral, though folks who work for the Federal government apparently have no choice. They are participating whether they like it or not, and I have yet to hear from anyone I know who is a Fed employee who is happy about it. Every one of them is opposed.

[~bs]

trump said he will forgive the deferral if re elected. Why wouldn't they be for it? Not like they have to deal with the blowback or administering the program. Private industry is a much different story than government. Just needs to remember to put the money on the side and not spend it.

If I had the choice to turn off all taxes until april next year and pay it all back at that time, I'd do it in a heartbeat.

[Like2Plan]

Do you think companies will tell their employees if they are going to do this? I've heard nothing from mine and would hope they just pass. What a mess! I didn't realize you were going to be double taxed come January to make it up, I thought you had to pay it back come tax time in April.

Hopefully your company gives you a pay slip for each pay detailing the deductions. No idea how it is detailed with your company--DH's has a line for Social Security tax and another line for Medicare Tax. Sometimes the taxes are referred to as FICA taxes which includes both. The employee portion of the tax: SS is 6.2% (up to 137,700 of earnings) and Medicare is 1.45% (no limit). If it goes to zero, then you know they are not deducting it from your pay.

[Like2Plan]

trump said he will forgive the deferral if re elected. Why wouldn't they be for it?

Do you mean for the govt workers or everyone? I'm trying to figure out how he could forgive it without getting Congress to approve the funding source?

[disneysteve]

Do you mean for the govt workers or everyone? I'm trying to figure out how he could forgive it without getting Congress to approve the funding source?

He can't. He has no power to do that. He can promise anything he wants to try and get votes but he can't deliver.

[disneysteve]

The employee portion of the tax: SS is 6.2% (up to 137,700 of earnings) and Medicare is 1.45% (no limit).

And to make it more complicated, that's not the limit they're using for the payroll tax deferral.

[Like2Plan]

And to make it more complicated, that's not the limit they're using for the payroll tax deferral.

That is true--I believe it is 4,000 per bi-weekly pay that would receive the deferral of these taxes.

[Petunia 100]

trump said he will forgive the deferral if re elected. Why wouldn't they be for it? Not like they have to deal with the blowback or administering the program. Private industry is a much different story than government. Just needs to remember to put the money on the side and not spend it.

If I had the choice to turn off all taxes until april next year and pay it all back at that time, I'd do it in a heartbeat.

That's so nice. However, this is something which only Congress can do.

[moneybags]

From an accounting stand point, this is too much work. The majority of payroll is done via software programs and they all need to be programmed for this change. Also, there are so many workers that switch jobs constantly. What happens to the company that has employees that don't pay back the deferral? Are they on the hook for it or is the government?

[disneysteve]

What happens to the company that has employees that don't pay back the deferral? Are they on the hook for it or is the government?

That's one of the big question marks. Defer taxes starting in September and then person leaves the job in December. What happens? Nobody knows. And since this all happened by executive decree, there was no thought process involved to work out the details or prepare for potential consequences of the action.

The end result, I suspect, is that some of this money will never be recovered, which will further weaken the Social Security system. Bad news all around.

[Like2Plan]

From an accounting stand point, this is too much work. The majority of payroll is done via software programs and they all need to be programmed for this change. Also, there are so many workers that switch jobs constantly. What happens to the company that has employees that don't pay back the deferral? Are they on the hook for it or is the government?

Employer and Employee Responsibilities - Employment Tax Enforcement

https://www.irs.gov/compliance/criminal-investigation/employer-and-employee-responsibilities-employment-tax-enforcement

[Petunia 100]

From an accounting stand point, this is too much work. The majority of payroll is done via software programs and they all need to be programmed for this change. Also, there are so many workers that switch jobs constantly. What happens to the company that has employees that don't pay back the deferral? Are they on the hook for it or is the government?

Another possibility is the employer.

[~bs]

Do you mean for the govt workers or everyone? I'm trying to figure out how he could forgive it without getting Congress to approve the funding source?

It would be for everyone that took advantage of the deferral. He would have to get it passed as part of some sort of stimulus or other package.