Calculate Your Payroll Tax Savings Under Trump’s Executive Order – Forbes


Editorial Note: Forbes may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations.

On August 8, President Donald Trump signed an executive order authorizing a temporary payroll tax deferral for American workers.

The deferral, which would be in effect between September and December 2020, would allow employers to refrain from withholding Social Security tax from employee paychecks. Employees earning about $100,000 or less per year would see an increase to each paycheck during the deferral period.

Typically, employees and employers each pay half of the total 12.4% Social Security tax due for each worker. But under the executive order, employers would refrain from withholding the 6.2% from employees for Social Security, but would still contribute their own portion for each worker.

Use this calculator to see how much your paycheck would increase due to Trump’s executive order to defer payroll taxes.

What is the amount you get paid, before taxes?

* This is a deferment, not a forgiveness, of employee payroll taxes. You may eventually need to pay back the amount you see here. Calculations are based on information from President Donald Trump’s Aug. 8, 2020 executive order.

Facebook Share

Frequently Asked Questions:

Is the payroll tax holiday a current law?

No. The payroll tax holiday is an executive order from President Trump. The president can authorize a temporary deferral of payroll taxes, but the deferred taxes can only be permanently forgiven with authorization from Congress.

How long will the holiday last?

According to the executive order, the payroll tax holiday will begin on Sept. 1, 2020 and end on Dec. 31, 2020.

How much will each person receive?

It depends on your income. If you earn $100,000 or less annually before taxes, you’ll see each paycheck increase by about 6.2%. If you make $50,000 per year before taxes, you’ll see an extra $258 per month distributed across your paychecks. Over the four-month holiday period, you’d receive an extra $1,032.

Will I have to pay this money back?

That’s unclear. Since the payroll tax holiday is a temporary deferral, it’s possible that you may have to repay the extra money you receive in your paycheck. It’s also possible that Congress could decide to forgive the deferred payroll taxes.

Your employer could continue withholding your payroll taxes if it’s uncertain whether the deferral will become permanent.

If Congress approves a second stimulus package, more details may be included in that legislation.

Can I choose not to participate?

Watch for guidance from your employer about whether or not your company will participate in the payroll tax holiday. Your employer may choose to continue withholding during a temporary payroll tax holiday. But if your employer pauses withholding, you probably will not be able to ask your employer to hold onto that extra cash.

I’m not working right now. Will I get any money?

The payroll tax holiday only applies to people who are receiving a paycheck from an employer who withholds payroll taxes. If you aren’t working, you won’t receive any funds from the executive order.

Forbes adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *