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New Payroll Tax Deferral

September 2, 2020 by Todd Renner

On 8 August 2020, President Trump issued a Presidential Memorandum to defer the collection of the employee portion of the FICA tax (6.2%). The deferral period begins 1 September 2020 and ends 31 December 2020 for employees earning less than $4,000 every two weeks ($104,000 per year). The employer must then withhold the deferred taxes from the employees between 1 January 2021 and 30 April 2021. If the employee is no longer employed in 2021, the employer must pay the taxes that should have been withheld. The deferral does not apply to federal income tax withholding, Medicare, or the employer’s share of FICA and Medicare.

The deferral is optional, and more details can be found in IRS Notice 2020-65.

Filed Under: Tax Information

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