Should Companies Participate in Social Security Tax Deferrals?
On August 8th, President Trump signed an executive order that would allow employees that make less than $104,000 to defer the collection of the employee side Social Security taxes. The Treasury Secretary has indicated that an employer can decide if their company will participate or not. As an employer, should you? It’s tough to say, but we’ll try to lay out the pros and cons of each possibility.
If your company participates:
- Employees that make less than $104,000 will have more cash in their pockets. The employee cash increase would be 6.2% of each paycheck.
- There is the possibility that the deferral is forgiven.
What are some risks in participating? A lot of guidance and details need to be released about the executive order. What happens if an employee defers Social Security taxes and leaves their position? Who is responsible for paying the deferral—the employer or the employee? Without more guidance there is risk that employers could be on the hook for employee deferrals. That’s the greatest potential downside.
Our hope is that more information and guidance will be available before you have to make a decision. If you have questions about this particular topic or are interested in working with a CPA firm that will provide you with proactive advice and help you stay on top of the ever changing 2020 landscape, feel free to reach out to us @ [email protected].