WASHINGTON – The Internal Revenue Service has clarified how President Trump’s deferral of the payroll tax, which funds Social Security benefits, will be made up in 2021.
Trump issued a memorandum earlier this month to suspend the tax from Sept. 1 through the end of the year, under the reasoning that it would give Americans more money in their paychecks during the COVID-19 pandemic.
On Friday, however, the IRS said in a statement that companies that choose to defer payroll taxes will have to withhold double the taxable wages to make up for the shortfall.
That money will have to be paid between Jan. 1 and April 30. The statement adds that employers “may make arrangements to otherwise collect the total Applicable Taxes from the employee.”
The payroll tax deferral is applicable to employees earning less than $4,000 during a bi-weekly period.
Trump has openly said he would like to get rid of the payroll tax completely, which could decimate social security benefits in just a few years.
Read more from the IRS here.