(Self-employed individuals pay the government self-employment taxes.) Your employer pays an equivalent amount of tax. You employer must also allow you to defer the taxes as the payroll tax holiday is optional for employers. Simple payroll, timekeeping and HR solutions, coupled with affordable pricing, makes PayNortheast the preferred payroll and HR provider for companies of all sizes. In essence, the deferral is an interest-free loan that would have to be repaid. Powered by President Donald Trump signed a series of executive orders over the weekend intended to expand coronavirus economic relief to Americans that have been hit hard during the COVID-19 pandemic. In essence, the deferral is an interest-free loan that would have to be repaid. Obviously, you have to get a paycheck to benefit from a payroll tax holiday. A payroll tax holiday is both easy to implement and would help more than 28 million employers and 33 percent of all workers in the U.S. A temporary and targeted tax cut will kick-start the economy and help both employers and employees by leaving more money … The US Treasury Department released guidance Friday evening informing companies and workers how Trump's proposed tax holiday will apply to them. 4 Reasons It Is, And A Couple Reasons to Be Hopeful, Kerby Jean-Raymond Is Reebok’s New VP of Creative Direction — What That Means & Why It Matters, Adidas Is Taking These New Steps to Address Its Race Issues — And How Beyoncé Is Playing a Role, Trump's Payroll Tax Deferral Has Started -- What That Means for Workers' Paychecks, This Is How Most Americans Would Spend Their Second Stimulus Check, Conservation Group Calls Trump's Great American Outdoors Act Signing a 'Resounding Victory for Public Lands', From ‘Star Wars’ to ‘Frozen,’ the Best Disney Face Masks for Adults to Buy Now, 11 Best-Selling Foot Peel Masks to Keep Your Feet Super Soft, 14 Nail Polish Color Trends You’re About to See Everywhere This Summer, The Best Dior Sneakers and Charms You Can Shop Now, Dior B23 Sneaker in Gradient Blue Dior Oblique Canvas $990, Location, Location, Location? Among the orders was a controversial (see: confusing) provision for a payroll tax holiday for earners making under $100,000 a year. Let's Chat, Direct access to certified HR professionals, Payroll Tax Holiday | Payroll Tax Holiday Guidance. The president has the authority to defer payroll taxes because he made a nationwide emergency declaration in March. President Trump's payroll tax holiday allows eligible employees to defer their portion the Social Security tax. Want to read more articles like this one? Employers allowing employees to defer taxes under Trump's payroll tax holiday are responsible for collecting and paying the deferred employee taxes in 2021. At the same time, Johnson noted, social security payroll taxes have taken a significant hit with tens of millions of Americans out of work and claims for social security growing faster than anticipated. Sept. 1 marks the first day of Trump's payroll tax deferral for employees, which he had handed down in an executive order in early August. The race is on! Failure to do so will result in fines and penalties. Companies like PayNortheast make complying with Trumps payroll tax holiday simple. Copy & paste this HTML in your website to link to this page. Employers not participating in the payroll tax holiday deferral should communicate their decision with their staff to avoid confusion. Is Retail’s Holiday Season Already Doomed? “Today’s retirees — more than 61.2 million people — depend on Social Security and Medicare payroll tax revenues for their Social Security and Medicare benefits,” said Mary Johnson, a Social Security and Medicare policy analyst in June. But due to lack of guidance as to how exactly workers will be expected to repay the deferred payroll tax, it’s expected that many employers will continue to withhold taxes as usual during the holiday. On August 8th 2020, President Trump's issued an executive order declaring a payroll tax holiday. From September through December, that will come out to about $665. Some ignore it for as long as possible, hoping that it is a temporary phase that will go away soon. Employees earning less than $2,000 per week ($4,000 bi-weekly) will be eligible to defer their portion of specific payroll taxes on wages earned between September 1st, 2020 and December 31st, 2020. Interested in learning more about how PayNortheast will save you time, money, and keep you compliant? “Their number one concern is that down the line, benefits will be permanently cut to pay for these ‘temporary’ tax cuts.”. Since Trump first touted the idea of a payroll tax cut in March when the pandemic took hold in the United States, many Americans expressed uncertainty about what exactly it would mean for their take-home pay. At the time, instead of paying 6.2% for social security taxes, employee contributions were 4.2%. 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