January 9, 2023
There have been a lot of questions about the Payroll Tax Holiday. What is it? How does it work? Does it affect me? There is a lot of confusion around it and I want to share information and tips for those of you who may have questions. What Is It: It is not a holiday, but […]
There have been a lot of questions about the Payroll Tax Holiday. What is it? How does it work? Does it affect me? There is a lot of confusion around it and I want to share information and tips for those of you who may have questions.
What Is It:
It is not a holiday, but a deferral. Through December 31st 2020 the 6.2% that is usually taken out for social security will stay in your check because of an executive order from the Whitehouse. That means each check will have more money in it. This executive order only applies to people who make $100,000 or less in annual salary. So don’t expect to get $500 extra each paycheck.
Do I Have A Choice:
Every employer can choose whether to participate in the payroll tax holiday. If your employer decides to participate then you should already see the extra money in your check since the tax deferral started at the beginning of September. If you are seeing the same amount in your check then more than likely your employer has decided not to participate. Just to be on the safe side I would keep an eye on your paychecks just in case your employer decides to participate.
Always A Catch:
When this payroll tax holiday was first announced it was made to sound as if the extra money would be kept by the employee. That is not the case. Employees will get extra money for four months and then have to pay it back the first four months of 2021. If you don’t want any part of this then you should ask your employer to opt out. If that is not an option you need to save the extra money so that you have it to pay it back in 2021.
This payroll tax holiday looks like a dream come true, but it could easily become a financial nightmare next year.
Other ways to stay in the know when it comes to your finances!
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