MEMPHIS, Tenn. (WMC) - On Sept. 1, employers nationwide were given the option to temporarily defer employees’ social security tax.
This comes after President Trump signed an executive order in August.
But what does this mean for employees?
The social security tax is 6.2% of every paycheck you receive.
By deferring the tax that 6.2 & will stay on your check, giving American workers more money in their paycheck from now until Dec. 31.
The decision to defer the tax is not up to employees, it’s up to the employer.
Ebony Clark with P3 Financial Group says there is a downside.
“It is a way to boost Americans’ paychecks for the next four months, but the downside is, come January 1, you now have to repay that. The employer is the one that would be tasked with collecting, once it is time to pay it back, with collecting that money and getting it to the IRS,” said Ebony Clark, COO of P3 Financial Group. “So the employer can opt in or out and then if the employer opts in, the employee can choose whether they want to opt in or out. That entire amount that was deferred has to be paid back by April 30 or you have to pay interest on that amount.”
In order to qualify, an employee must make less than $4,000 every two weeks.
One concern many have with this deferral is that there is no guidance on what happens if an employer chooses to defer this tax but is fired or quits before the payback period.
It is unclear who will be left paying back those taxes.