What you need to know about the Payroll Tax Deferral

Now that the dust has settled a bit on this last-minute attempt at offsetting the financial hardships that the pandemic has created for so many people, let's talk about what the Payroll Tax Deferral [issued as an executive memorandum on August 8, 2020] may mean for your business and employees. 

The memorandum and deferral apply specifically to the employee portion of the Old Age, Survivors, and Disability portion of FICA (typically shortened to OASDI). It is 6.2% of the employee’s gross wages. 

See IRS code section 3101(a) for the specifics or if you feel like taking a midday nap. 

The deferral is effective - should you choose to participate - from September 1, 2020, through December 31, 2020. Participation is voluntary. We’re in November now, so you’ve already decided if your company is participating in the deferral and adjusted payroll withholding if you are. 

Regardless of if you are or aren’t taking advantage of the deferral, you’ll want to stay in-the-know on what may be coming down the pike in the next few months. 

This year has been loaded with economic hairpin turns and sudden bumps in the road. 

Q4 is a great time to step back, catch your breath, and appraise yourself of any pertinent information you might have overlooked. Particularly when it comes to anything involving the IRS. And let’s be real, virtually all the fiscal stimulus offered for businesses this year, as in most years, will affect your tax filing and leaves us looking to the IRS for clarity and guidance (YIPPEE). 

Over the next few weeks, we’ll be covering all things Payroll Tax Deferral including: 

• The current implications for Q4 whether or not you’re participating, so you can make sure to cross all the t’s and dot every i. 
• How 2021 might look, and the possible outcomes whether you participated and the deferred tax is forgiven or not forgiven as well as what you may still face early next year if your company did not participate. 
• Steps you can take now through the end of the year to make sure you’re taking control of your company’s financial future and prepare for different potential outcomes in 2021.

As of right now, the Payroll Tax Deferral is just that, a deferral. 

There is no guarantee that it will be forgiven. Stay tuned so you can make informed and confident decisions as we all navigate this year from hell together. 

On another note - in case you’re one of the folks who’s feeling the weight of this year and the fatigue from navigating the financial, social, emotional, and every other ‘-al’ burden of 2020... I want to make sure you know you can reach out to me, and I’ll help you. 

As a business owner or manager, there’s a good chance you’ve had your fair share of hardships this year. I’m right there with you. 

Even if you’re one of the lucky few who saw an explosion of sales as the pandemic set in (and I sure do hope you are!), chances are something has rocked your company boat recently. 

I get it. The last thing you want to do is talk more pandemic-related uncertainty.  

The good news is if you just can’t stand to wade through all the accounting, payroll, and tax implications of 2020 - I’ve got your back. 

Whether you need a little extra help to wrangle the numbers yourself or you need someone you trust to steer the ship, I’m ready when you are. 

Have a wonderful day today and keep up the good fight,

Margo