Payroll tax deferral

[vendordontmesswithme]

Has anyone seen how Target will handle this? From what I understand beginning Sept 1 taxes won't be taken from our paycheck for the remainder of the year. The IRS says that we will have to repay the taxes anway next year. This is when hours are reduced. With the overtime we will be able to work I may have to set money aside and hope it's enough to pay the tax.

 

[commiecorvus]

This thing is a mess from the word go.
Companies don't have to participate in it if they don't want to and there are a whole bunch of reasons why they wouldn't want to.
Plus pulling money out of these programs is the last thing we should be doing.

"The initiative postpones some payroll taxes that would normally be due between September 1 and December 31 and makes them due between January 1 and April 31, 2021.
Under the plan, which would only apply to workers with an annual salary of less than $104,000, employers are asked to stop withholding the 6.2% payroll tax that represents an employee’s share of Social Security taxes.
Employees would still be responsible for the taxes, just not immediately—that means employers who stop withholding payroll taxes now, would be able to withhold twice as much early next year.
Trump wants Congress to forgive the deferred tax payments, but some employers fear that if they stop withholding taxes without a guarantee the deferred payments will be forgiven, they’ll be stuck with the bill, a particular risk if a worker should leave their employer before 2021, meaning the company won’t be able to deduct it from future paychecks.
Employers can choose whether to opt in to the deferral plan."

Trump’s Payroll Tax Deferment Plan Goes Into Effect

Employees would still be responsible for the uncollected taxes, but not until 2021.

www.forbes.com

 

[IWishIKnew]

My guess is that the big companies won't do it. I'm no payroll expert, but I imagine such changes aren't super easy or cheap, so to have to change the taxes for four months, change them again at the beginning of the year and then again after the double collection period is expensive and risky and there's literally no money it for the companies. And the rage from their employees, who don't understand the double collection thing will be very real.

It's a fucking campaign stunt and I hope very much that corporate America refuses to play along.

 

[DBZ]

My guess is that the big companies won't do it. I'm no payroll expert, but I imagine such changes aren't super easy or cheap, so to have to change the taxes for four months, change them again at the beginning of the year and then again after the double collection period is expensive and risky and there's literally no money it for the companies. And the rage from their employees, who don't understand the double collection thing will be very real.

It's a fucking campaign stunt and I hope very much that corporate America refuses to play along.

Explain the double collection thing please.

This will suck for single people with no kids. They will be writing a check to the government in January-April.

 

[IWishIKnew]

In order to make up the shortfall for not collecting payroll taxes for 4 months, they have to take twice as much out of the next four months of checks. So people will see 6.2% more on their paycheck in Q4, but 12.4% less in Q1 to make up for it. Many people will spend that extra cash on Christmas and stuff, and may get blindsided by suddenly having less in their bank accounts in January.

 

[Yetive]

And working fewer hours most likely, so maybe more than 12.4% will be needed. I don't think Target will participate.

 

[FlowTeamChick]

Agreed that it's a campaign stunt. Agreed that this is almost certainly a complicated and expensive thing for companies to work out. Used to write payroll checks - on a way, way smaller scale - and it's really kind of a big deal to change something like this, especially if it's only temporary.
Not to mention the dent in funding for Social Security.

 

[jackandcat]

I don't think private sector companies can be forced by Uncle Sam to "defer" collecting the FICA payroll tax. There was no act of Congress, simply an Executive Order which primarily impacts the Federal Government and its agencies. There's a remote chance that heavily-regulated companies like defense contractors and banks could be forced to "defer" payroll taxes, but I doubt it. The Feds really have no way to force most companies to participate in this strange "deferral" for which the taxes will still be fully due for payment.

As an economic stimulus during the Great Recession, in 2010 Congress enacted a temporary reduction in the payroll tax rate. It was signed into law by Obama and cut the payroll tax rate from 7.65% to 5.65%. It put more money into workers pockets immediately, but not as a "deferral" gimmick. The payroll tax cut expired at the end of 2011.

 

[TargetOldTimer]

If Target does this, Ill just invest 6% into my 401k after taxes.

 

[Noiinteam]

I asked my SD today if she knew how Target would handle this and she didn't know but was going to try and find out.

 

[dannyy315]

The fact that we haven’t heard anything about this and it’s the first month tells me Target isn’t participating.

 

[FlowTeamChick]

Check your first pay stub where the whole pay period is in September. (Haven't accessed this info online myself, but I'm sure it must be there.) I'm guessing that Target won't be doing this - so much headache with no benefit.

 

[Hal]

Just checked my stub for this week. Looks the same. So nothing is being taken out or it hits next week.

 

[Rarejem]

Just checked my stub for this week. Looks the same. So nothing is being taken out or it hits next week.

I don't think it will be until next check because of when the pay period ended.

 

[Dcnewb4now]

I don't think it will be until next check because of when the pay period ended.

I asked the gm and he had no friggen clue. He said something about target always following the law. Lol

 

[BoxCutter]

Asked my ETL-HR. They knew NOTHING about it. AT ALL. I had to explain what Trump did. Said they would look into it.

Also, Trump did it through an Executive Action, with no approval from Congress so not really a “law.”

Since the Executive Action only went into effect yesterday, any changes won’t be seen until after this week.

 

[IWishIKnew]

I asked the gm and he had no friggen clue. He said something about target always following the law. Lol

From Commie's quote: "Employers can choose whether to opt in to the deferral plan." So it's not law, it's a request. One I really hope companies just ignore.

 

[Ringwraith917]

If Target participates, you can choose to withhold an additional fixed amount from each paycheck. Estimate 6.5% of your normal paycheck and go into your benefits on eHr and add an additional withholding for that amount

 

[Panda13]

If Target participates, you can choose to withhold an additional fixed amount from each paycheck. Estimate 6.5% of your normal paycheck and go into your benefits on eHr and add an additional withholding for that amount

But remember to then change it next year.

 

[Dcnewb4now]

From Commie's quote: "Employers can choose whether to opt in to the deferral plan." So it's not law, it's a request. One I really hope companies just ignore.

I know it isn’t law. Just thought it was hilarious that the gm said target always follows the law lol

 

[Rarejem]

If Target participates, you can choose to withhold an additional fixed amount from each paycheck. Estimate 6.5% of your normal paycheck and go into your benefits on eHr and add an additional withholding for that amount

How does that affect employers withholding twice the amount of payroll tax once the deferment period is over?

 

[Ringwraith917]

How does that affect employers withholding twice the amount of payroll tax once the deferment period is over?

When you file taxes next year you should get that $ back, which should help offset the additional amount being withheld from your paycheck.

 

[Rarejem]

When you file taxes next year you shpuld get that $ back, which should help offset the additional amount being withheld from your paycheck.

I guess I'm wondering more if it wouldn't be smarter to not have it withheld from the paycheck (since they're going to do that) and put it aside instead to use for your operating expenses when those checks become much smaller ?

 

[BoxCutter]

My HR got back to me. They checked with the HRBP who said “Target hasn’t decided yet” if we would participate. So, basically, no one other than Brian Cornell and the CFO know anything about this.

 

[IWishIKnew]

If Target participates, you can choose to withhold an additional fixed amount from each paycheck. Estimate 6.5% of your normal paycheck and go into your benefits on eHr and add an additional withholding for that amount

You're better off taking that amount and putting it in a savings account (savings rates suck right now, but they're better than nothing) and getting at least a little interest on it. Then you'll still have it banked for Q1 and won't need to wait until your tax return comes in.