Are you considering taking advantage of the President’s Executive Order for payroll tax cut? If so, just understand it defers Social Security taxes till the end of the year. Defer means the deferral amount has to be paid back. So that deferred amount, over 4 months, can create a large tax liability.
For employers, first consider that the deferral is permissive, that you are not required to defer. So business owners should consider continuing to withhold payroll taxes from paychecks as they normally do rather than deferring if the payback is of concern to their employees.
For employees, if you are in a situation where payroll tax withholding is deferred, then it is up you to be accountable by managing your spending, and saving the proper amount to payback the deferred payroll tax. Then for you those of you owners of s-corporations, that if you are a shareholder-employee, you are also an employee. Therefore, subject to employment taxes and rules.
For general information view this article.
And as always, when it comes to taxes, employee law, HR policies, and structuring agreements consult with your professional advisors.
