The New Payroll Tax Cut Will Have To Be Paid Back
For those who are participating in the new "Payroll Tax Holiday" (payroll tax cut), this is some important information.
According to WIVB, the new payroll tax cut that went into effect on September 1st would help people get more money in their paychecks the rest of 2020, but by the start of 2021, that money would need to be paid back.
Normally, you and your employer pay a 6.2 percent tax that goes into social security. The new payroll tax cut would allow you and your employer to forego that tax the rest of the year.
However, that tax cut only delays it, and by the start of next year, the tax would double to pay it back.
The average extra money earned the rest of the year (for the average worker) would equal roughly $1,000.
There is some advice for those that will be part of the payroll tax cut. EG Tax Vice President Chris Fabian says if your employer lets you keep that tax cut, try and keep it aside.
“If you are getting the extra money, just remember, next year that money, they are going to want it back. So that is money you won’t have in your pocket for your rent. So I would keep it aside, says Fabian”
However, the problem with keeping the money is that the idea of the tax cut is to help stimulate the economy.
The "Payroll Tax Holiday" applies to workers making less than $100,000 per year.
Read the full story at WIVB.