Finally, the IRS issued guidance on Friday evening about payroll tax deferrals.
And, as we’ve been communicating … this may not be a very helpful program for most Chattanooga taxpayers. In fact, it’s actually up to employers (not employees) whether or not to withhold Social Security payroll taxes from their employees’ paychecks from September through December. And again — this is a DEFERRAL, not forgiveness. With the elections looming, it’s unlikely to be forgiven.
Therefore, to pay back the amounts that were deferred, the Social Security withholding taxes would increase from Jan 1 through April 30.
This means (for employees) more money for a few months and then less for a few months after. For employers, it’s even thornier (what if the employee is no longer there? etc.) … so you can’t count on this for help.
But you can count on yourself, and the decisions you make NOW to help your financial situation. Even if you are locked-in to a particular rate of pay, there are always decisions you can make that will affect your bottom line.
Getting ahead of the tax planning game. ESPECIALLY in light of impending electoral chaos, it’s a good idea to get your ducks in a row so that your 2020 tax bill is as low as it can possibly be.
We’re all going to want to make sure we are keeping all that we possibly can in this season.
John and Wanda King
“CRISIS Action Plan” for my Chattanooga tax clients and friends:
1) Don’t marinate in other people’s panic. Be mindful of your social media consumption.
2) Continue to stay financially and logistically prepared for worsening situations.
3) Make sure you have some ready, liquid assets, if you are able. (I.e., cash in the bank, and in hand.)
4) Set aside plans for any big spending until the dust settles — but especially look out for your small business owner friends and vendors.