You Will Have to Pay The Payroll Tax Break Back
Before you get excited about the "Payroll Tax Holiday" putting a little more money back into your paycheck, read this.
President Trump signed an executive order for a "Payroll Tax Holiday," giving certain workers more money in their paychecks, but there are some things you need to know.
The executive order calls for the 6.2 percent tax that funds social security to be cut, according to WIVB. The order will allow people to not pay the tax though the end of 2020. Here's the issue, the next year, 2021, your social security tax would double. The approximately $1000 bonus for the average American worker would need to be paid back starting January 1, 2021. It will need to be paid in full by April 31, 2021, according to Thomas Reuters. Chris Fabian, Vice President of EG Tax told WIVB,
“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.”
Workers who make less than $100,000 per year are eligible for the tax holiday. It took effect on September 1, 2020, so you may see the extra money in your paycheck soon. Just remember, you will need to pay it back in three months and will only have four months to pay it back by the deadline, so it may be best to just hold onto it. If it is not paid back by the deadline, you will possibly face penalties and interest.