“Took some time to celebrate. Just one day out of life. It would be, it would be so nice.” -Madonna
A holiday from payroll taxes? That sounds amazing! Unfortunately, it’s a TEMPORARY holiday so don’t get too excited.
The Social Security payroll tax holiday was passed in late August as part of COVID-19 relief. The IRS issued a notice that allows employers to temporarily suspend withholding Social Security payroll taxes on eligible employees’ paychecks. It only applies to employees with wages less than $4,000 for a biweekly pay period, including salaried workers earning less than $104,000 per year. The “holiday” is available from September 1 – December 31, 2020.
This temporary deferment means that the employer will need to collect additional amounts from paychecks from January 1 – April 30, 2021, to repay the obligation. If repayment is late, employers are subject to interest and penalties starting May 1, 2021.
This payroll tax “holiday” is not mandatory so employers are not obligated to participate. Some employers do not want to implement due to the large tax burden they will put on employees in 2021. Some employers want to offer employees the extra take-home funds now.
If you offer the tax “holiday” be sure your company is making major adjustments to have payroll is processed! You may also want to have an agreement in place outlining that the employees are obligated to pay back the funds if they take the holiday but then leave the company.
As of now, there is no indication that legislation will be enacted to forgive the uncollected taxes. So if you take the holiday be sure you can pay it back next year! #taxholiday #ildertonbookkeepingllc #COVID19 #payrolltaxes #takeaholiday #socialsecuritytaxes #smallbusiness #confusion #2020isrelentless #taxcuts #shoplocal #shopsmall
Photo cred to my seester Suzannah Farr!