the New payroll tax executive order

[mariecouch]

Hello,
I am interested to hear how others are handling the new payroll tax executive order. We are inclined to continue withholding since the taxes will eventually become payable.
Thank you,
Marie

[NeilZ]

Hello,
I am interested to hear how others are handling the new payroll tax executive order. We are inclined to continue withholding since the taxes will eventually become payable.
Thank you,
Marie

FWIW .. until the IRS actually announces it, you should continue withholding. That said, yes the tax will still be due when you file in 2021, so I would continue withholding for those employees.

[mariecouch]

Thank you Neil!

[wms7328]

I don't disagree with continuing withholding. However, if the decision is to forgive the suspended withholding, the employees would rightfully expect to get the funds that were withheld. Do you think the IRS would return the withholding that is ultimately forgiven so it could be given to employees? I'm thinking about continuing to withhold the 6.2% employee contribution but not sending it in for Sept-December. Then if it has to be paid in 2021, I would then send in the payments withheld. If the decision is to forgive the suspended withholding, then I could give that to employees in 2021.

Any thoughts would be appreciated.

Morris Sample
Treasurer, Unity Presbyterian Church

[NeilZ]

I don't disagree with continuing withholding. However, if the decision is to forgive the suspended withholding, the employees would rightfully expect to get the funds that were withheld. Do you think the IRS would return the withholding that is ultimately forgiven so it could be given to employees? I'm thinking about continuing to withhold the 6.2% employee contribution but not sending it in for Sept-December. Then if it has to be paid in 2021, I would then send in the payments withheld. If the decision is to forgive the suspended withholding, then I could give that to employees in 2021.

Any thoughts would be appreciated.

Morris Sample
Treasurer, Unity Presbyterian Church

From what I understand, what is suggested is that WITHHOLDING be suspended, but at the end of the year the employee would still be liable for the INCOME TAX. There is no 'forgiveness' here ... not sure where you got that idea from.

[wms7328]

It’s my understanding that the President has stated that he intends to forgive the suspended withholding pending outcome of election. Was looking for way that employees would not be liable for large payment later.

[NeilZ]

It’s my understanding that the President has stated that he intends to forgive the suspended withholding pending outcome of election. Was looking for way that employees would not be liable for large payment later.

FWIW .... when the employees do file their 2020 Taxes, the IRS will refund any overpayment of withholding as they have been doing since withholding was instituted. So the employees will have a small amount kept weekly, or a large refund check in 2021.

[wms7328]

Neal, I'm not sure I fully understand your answer. You are saying that if we continue to take out the employee part of FICA withholding, we should send that in now or wait until end of the year? If we suspend the employee FICA withholding, which gives employees more in take home pay each month, then assuming the suspended withholding would have to be paid in 2021, then how would you see that being collected from employee?

Thanks, Morris

[NeilZ]

Neal, I'm not sure I fully understand your answer. You are saying that if we continue to take out the employee part of FICA withholding, we should send that in now or wait until end of the year? If we suspend the employee FICA withholding, which gives employees more in take home pay each month, then assuming the suspended withholding would have to be paid in 2021, then how would you see that being collected from employee?

Thanks, Morris

Since the IRS has NOT issued any rules (AFAIK) about the suspension, and you do withhold, you make the normal withholding deposits you always do at the EFTPS website.

If you choose not to collect, YOU do nothing in 2021, the taxpayer will have to come up with the funds to pay the tax bill.
This is why I would still do the withholding, I would hate to have my employees try to figure out how to come up with the tax shortfall, if there be any.

Frankly, my wife's a pastor. She does NOT have to have withholding done at all since she would be paying SECA taxes. We have the tax withheld (along with an additional amount) from her paychecks rather than have to pay a personal quarterly tax deposit. Anything withheld over the final tax bill, comes back as a refund.

[wms7328]

OK, think I understand. You are saying to continue withholding, send in the payments as we normally would. Then if the withholding for Sept. through end of the year is somehow forgiven later, the employee would get the refund when they filed their tax return in 2021 for 2020. I was like you, I don't want to put employees in position where they might have to come up with a big payment of taxes if we don't continue to withhold them now.

Thanks, Morris