Payroll tax cut truth time: You might not get a ‘holiday’
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22,Sep,2020,
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The payroll tax deferment was one of the four executive actions Trump signed on Aug. 8, with the other three involving what the administration referred to as enhanced unemployment benefits, an eviction moratorium and a continued deferral on student loan payments. The actions came as Democrats and Republicans continued to fall short of an agreement on the terms of a new stimulus package, which might include a second round of stimulus checks. That deadlock goes on, with a “skinny” relief bill floated by Republicans failing to pass the Senate on Friday.
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The way the Social Security tax works is that 6.2% is deducted from an employee’s paycheck. That same amount is also required to be paid by the employer, making a total of 12.4% sent to the IRS. A payroll tax cut would mean that employees and employers would be exempt from paying this tax during the set “holiday” period, potentially making your paycheck larger (though there’s a catch — more below).
“Bird was erroneously listed as a company that filed for a PPP Loan. We did not apply for nor did we receive a PPP Loan. We decided as a company not to file an application as we did not want to divert critical funding from small and local businesses.” – Bird
Is a payroll tax holiday definitely happening? Even though the president’s other executive actions are legally questionable in regard to whether they’re unconstitutional, the payroll tax holiday is within Trump’s executive powers, according to Jacoby.
Senators from the Democratic party asked the Social Security Administration on Aug. 19 to analyze the implications of this permanent payroll tax holiday after Jan. 1, 2021, that the president suggested. The administration chief actuary Stephen C. Goss says in a letter on Aug. 24 if there is no replacement funding for that tax, then Social Security reserves would be depleted in the middle of 2023.
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According to VanderZanden, Bird had begun an application with Citi “early on,” but decided not to go through with it on April 23. “It looks like Citi started an application while they waited for our decision on whether to formally apply…They confirmed that the temp app. was cancelled that evening and never submitted.”
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Bird has denied it received a loan from the US government to help it through COVID-19. Its statements follow reports Monday that the electric scooter company received between $5 million and $10 million under the government’s Paycheck Protection Program in April. Both CNBC and The Verge found Bird in the data released Monday by Blog 1930 Blogspot the Trump administration as part of its coronavirus economic stimulus package under the CARES Act, but Bird says it didn’t go through with its loan application.
How do you pay back the deferred payroll tax? The IRS said in a memo dated Aug. 28 that employers who participate in the payroll tax holiday will then have to pay back the taxes starting in 2021. This will be done by deducting an additional payroll tax deduction on top of the standard deduction. To put it simply, more money will be taken out paychecks from Jan. 1 to April 30 in 2021 to repay the taxes owed.
“Overall, it is likely that many employers will judge this deferral to be either too complex or impose too much potential liability on their end to be worth taking advantage of, mitigating much of the limited benefit of the deferral,” Watson said.