Applying the new Memorandum deferring certain employee Social Security tax withholdings
Posted on September 21, 2020
The Department of Treasury and Internal Revenue Service has issued guidance on how to implement the Presidential Memorandum issued on August 8, 2020.
TEIPEN CPA Group, P.C., has learned that the Memorandum allows employers to defer withholding and payment of the employee’s portion of Social Security tax if the employee’s wages are below a certain amount. The IRS-issued guidance postpones the time for employers to withhold and pay employee Social Security taxes.
Here are the Memorandum specifics, according to the IRS website:
- The IRS has stated it is making relief available to apply to wages paid starting September 1, 2020 through Dec. 31, 2020.
- The employee Social Security tax deferral may apply to payments of taxable employee wages that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately.
- No deferral is available for any payment to an employee of taxable wages of $4,000 or above for a bi-weekly pay period.
Because there are ongoing tax relief bills, legislation, memorandums, adjustments, and announcements relating to tax relief due to the COVID-19 pandemic this year, it’s a good idea to talk to your CPA to find out which announcements will intersect your business. TEIPEN CPA Group can help your business with information and guidance you can trust.