Hey guys! It's been a minute and I've been doing all I can to maintain my sanity during 2020 between COVID-19, social injustice and just LIFE. I wanted to touch bases with you because I see posts floating around on social media with people hype about having bigger paychecks due to this payroll tax holiday for the remainder of 2020. I will attempt to answer some questions I've received and please leave a comment and let me know if this helps!
So that's the post floating around on the book of faces, lol. I know you've seen it. It's been shared over 45,000 times. So let's talk about how we got here. The 45th President of the United States issued an executive order on August 8th to allow for a payroll tax holiday. This is 'supposedly' a way to help stimulate the economy until Congress decides on a 2nd stimulus check or not. This means that employers can OPT-IN and stop deducting the social security payroll tax (6.2%) you currently pay from your paycheck if you make less than $4,000 every two weeks. Yes, this means you will have a bigger paycheck, but the CATCH is, because it is a DEFERRAL (NOT elimination of taxes) you will have to repay the funds at a later date. That means between Jan 1 - April 30th you'd be paying double social security payroll taxes unless Congress votes to forgive it altogether. Bigger check now, for smaller checks later, I think not.
If you want to know if this will affect you, I would encourage you to reach out to your HR/payroll departments at your company to see if your company is even participating. If not, not worries. If they are, I would suggest you take the extra funds and stash them in an account for when the time comes to repay.
I hope this answers your questions! If not, leave them below in the comments and I'll be sure to get back to you.
Until Next Time,