Deferred Payroll Taxes to Be Paid in 2021

The IRS says Social Security payroll taxes that aren't collected this year under President Trump's executive order will have to be withheld and paid early next year.

(Image credit: Getty Images)

President Trump recently issued an executive memorandum suspending the collection and payment of Social Security payroll taxes from September 1 until the end of the year for workers making less than $4,000 for any bi-weekly pay period (i.e., $2,000 per week, or $104,000 per year). The president's action doesn't eliminate the tax debt – it just delays withholding and payment of the tax. However, the memorandum didn't say when the tax had to be paid. But the IRS has answered that question.

Employers aren't required to halt withholding and payment of the tax. But if a business does comply with the president's order, it will have to collect the deferred taxes from their workers' paychecks ratably from January 1 to April 30, 2021. So, during the first four months of 2021, their employees will have double withholding from their paychecks for the 6.2% Social Security payroll tax.

If he wins the election on November 3, President Trump says he will push for the elimination of the deferred taxes so that workers will not have to pay them later. However, that will require Congressional action. Depending on the election results, that could be a very difficult thing to get.

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As a result, if your employer stops withholding the payroll tax from your wages in 2020, you probably don't want to spend that money right away. Our advice is to put that money aside for the time being. While it's possible Congress will eliminate the tax debt, that doesn't appear to be likely. If there's no Congressional action, then the deferred taxes will be taken out of your paycheck during the first four months of 2021.

For more information on the president's executive order to defer Social Security payroll taxes, see What Trump's Payroll Tax Cut Will Mean for You.

Rocky Mengle

Rocky Mengle was a Senior Tax Editor for Kiplinger from October 2018 to January 2023 with more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, Rocky worked for Wolters Kluwer Tax & Accounting, and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky holds a law degree from the University of Connecticut and a B.A. in History from Salisbury University.