Treasury Dept Releases Guidance on Trump’s Payroll Tax Deferral
The Treasury Department released guidance related to President Trump’s payroll tax deferral, which is scheduled to begin next week on September 1 through December 30. The guidance allows employers to defer payroll tax withholdings for employees with incomes below $4,000 during a bi-weekly pay period, calculated on a pre-tax basis, or the equivalent.
Employers can opt to not withhold Social Security payroll taxes from their employees’ paychecks from September through December. To pay the amounts that were deferred, the amount of Social Security payroll taxes withheld from employees’ paychecks would increase from Jan. 1 through April 30.
Trump, however, has said he will forgive those deferrals, rendering the measure a true payroll tax holiday. If he does not, employees could be on the hook for a sizable tax bill next year. In the event that deferrals are not forgiven, interest and penalties would begin accruing on May 1.
Trump’s top economic adviser, Larry Kudlow, said last week that the administration is “exploring ways” to forgive the tax payment completely. The taxes “essentially can be forgiven if you stretch it out five years, eight years,” he said.
A number of business groups have raised concerns about the order, arguing that there are some uncertainties about how it would apply and that a deferral could be challenging for employees who could face more taxes next year. Many businesses are not expected to implement a deferral, and are expected to continue to withhold payroll taxes from their employees’ paychecks.
Talley’s experienced team of tax professionals provides comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you. For more information, contact us today.