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Potential Deferral of Employee Social Security Taxes

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On August 8, 2020, President Trump issued a Presidential memoranda directing the Secretary of the Treasury to permit the deferral of withholding of social security tax on compensation for employees earning less than $4,000 bi-weekly or the equivalent (about $104,000 on an annualized basis).   This deferral would apply only for the period September 1 – December 31, 2020, and would be without any penalty or interest charge when repaid.  This measure would increase the net take home pay of the impacted employees, and has no effect on employers.

Further, the Secretary of the Treasury has been directed to explore ways to eliminate the obligation for the employee to repay the deferred taxes.

Congress has already deferred the time frames for employer’s deposits of their portion of social security taxes for the rest of 2020 and now President Trump is trying to find some relief for employees.

Further guidance is expected on this topic in the near future.

 

 

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