Presidential memorandum issued allows an employer to defer its employee withholding, deposit and payment of the employee portion of social security insurance for its employees whose pretax wages or compensation during any biweekly pay period generally is less than $4,000. The memo applies to payroll taxes on wages paid from September 1 through December 31, 2020. These deferred taxes require employers to withhold and pay deferred taxes from compensation during the periods January 1, 2021 through April 30, 2021.
- An eligible employee is an employee whose wages are less than $4,000 for a bi-weekly period or the pay period equivalent.
- Employees pay a 6.2% Social Security tax on wages up to an annual limit ($137,700 in 2020).
- Employees also pay Medicare tax, but this is not affected by the executive memorandum.
Currently, there are several elements that remain unknown until the Internal Revenue Service (IRS) issues guidance.
October 28, 2020 2:49 pm