(AmericanProsperity.com) – On August 8, President Donald Trump issued payroll tax cuts through an executive memorandum. Many raised an eyebrow as to how effective they would be when he did so. As they began September 1, not all employers opted into the tax deferment.
The temporary tax cuts occur from September 1 through December 31, 2020, for those earning less than $104,000 per year. Employers, however, must pay the deferred 6.2% Social Security tax between January 1 and April 30 of next year, unless US Treasury Secretary Steven Mnuchin permanently forgives the taxes through legislation.
President Trump plans to push to forgive these payments if he is reelected. He explains his reasoning for the tax deferment here:
"This modest, targeted action will put money directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most," Trump said in his directive. https://t.co/r8TdUmYEUJ
— KTVO Television (@KTVOTV) September 4, 2020
Everyday employees may see a rise in take-home pay through New Years. But, their paychecks will lower again in the first quarter as employers recoup their deferred taxes if no tax forgiveness is achieved. However, not all businesses will opt into this program for fear of needing to pay double taxes in the new year.
Some Americans struggle to make ends meet, and figuring out taxes and payroll changes may add to the stress. As an employee, reach out to your employer to see if they chose to defer the taxes to avoid any surprises. If you own a business, make sure your employees understand what this means for their paycheck both in the immediate future and in 2021.
~Here’s to Your Prosperity!
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