Payroll tax Feed

I hope your 2022 welcoming plans are on track this New Year's Eve eve. But as the time tick tocks away, some folks need to think a few days further into the fast-approaching New Year. Specifically, their focus should be on Monday, Jan. 3, 2022. That's the day that some California residents whose lives and/or businesses were impacted by wildfires need to file certain 2020 returns. The first workday of the New Year also is the deadline for employers and self-employed individuals who deferred paying part of their 2020 Social Security taxes. California disaster delay: Mother Nature was not kind... Read more →


AMT law changes plus annual inflation adjustments mean that this parallel tax aimed at the wealthy is no longer such a broadly-based ATM for the tax collector. The political and legislative battle over how to collect from the wealthiest taxes, which was mentioned in yesterday's Part 6 tax inflation post on (among other things) estate taxes, is not new. It's been going on for decades. The Alternative Minimum Tax, or AMT, is one way that Washington, D.C., came up with to ensure that the rich pay at least some taxes. This post, Part 7 of the ol' blog's 10-part inflation... Read more →


Rep. John Larson speaking at a press conference announcing his latest Social Security bill. Joining Larson were his Democratic colleagues (in masks behind him left to right) Reps. Terri Sewell of Alabama, Steven Horsford of Nevada, and Alexandria Ocasio-Cortez of New York. (Photo courtesy Office of Rep. John Larson) If you're like me, closer to your retirement date than when you started your first full-time job, you keep a close eye on Social Security. For, well, it seems like forever, we've been hearing that Social Security is going broke. The federal retirement benefits doomsday date is a bit like those... Read more →


The Social Security Administration (SSA) gave retirees and other recipients of the program's payments good news this week. Next year, they'll bet the biggest benefits bump in decades. Some higher earners, however, aren't so happy. That government benefits announcement also noted that the amount of income subject to payroll taxes also is going up in 2022. This amount, known as the Social Security wage base, is the maximum earnings, by both salaried workers and the self-employed, that are subject to that retirement portion of the Federal Insurance Contributions Act (FICA) tax. In 2021, the wage base is $142,800. On Jan.... Read more →


One of the biggest challenges for any business, whether new or established, small or larger, is hiring. It's also a challenge for the Internal Revenue Service, especially when companies don't understand or intentionally avoid employment taxes. Money lost from unpaid payroll taxes, both unreported or underreported, is huge, notes a recent Kiplinger's Tax Newsletter, accounting for a large portion of the overall federal Tax Gap. This is the amount of money the IRS is owed, but hasn't been able to collect. Kiplinger cites IRS data from 2019 that found $77 billion of payroll taxes fell through the cracks yearly from... Read more →


With the financial situation of Uncle Sam's retirement benefits program getting more dire, a recurring suggestion — raise the Social Security payroll tax wage base — is getting some traction this year. Labor Day typically marks the end, at least unofficially, of summer. After the early September long weekend, most schools are back in session, albeit still in remote/real classroom combos due to the Delta COVID-19 variant. Workers, many also still in hybrid coronavirus cubicle/Zoom formats, tend to focus on their jobs. Those jobs are critical not just to the employees, but the economy as a whole and to two... Read more →


Photo by FRANK MERIÑO from Pexels With the Delta variant fueling a resurgence of COVID-19 cases, focus has fallen on folks who are choosing not to get jabbed. Vaccine resistors offer many reasons for not getting the shot (J&J) or shots (Pfizer and Moderna). One of them is that they can't afford to take time off work. Uncle Sam is encouraging employers to cut their job-focused unvaccinated workers some slack. Eligible businesses who let their employees have paid time off to get the vaccine will get a tax break. And he just expanded the situations to which the business tax... Read more →


Being the boss can be fulfilling, exciting and, if profitable, mean more tax responsibilities, like paying self-employment taxes. (Photo by Zen Chung via Pexels.com) There are a lot more self-employed taxpayers this filing season, thanks to (you guessed it) the COVID-19 pandemic. People whose hours were reduced at their full-time jobs made up (or tried to) the lost income with side gigs. Others whose salaried positions were eliminated embraced their entrepreneurial spirit and became their own bosses. Now they are filing their tax returns for the first time with self-employment income. That, of course, means encountering another form, Schedule SE.... Read more →


Millions of U.S. government employees in federal buildings across the country, like this one Sacramento, California, are being forced to participate in the Trump Administration's partial payroll tax deferral. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are continuing their efforts to cobble together a second round of COVID-19 stimulus payments. Some people, however, don't want the ostensible financial relief they're already getting. They are among the federal workers and military members who've had the Social Security portion of their Federal Insurance Contributions Act (FICA) payroll taxes automatically suspended. Forty-three Representatives say they've heard from these constituents who are... Read more →


National Small Business Week 2020, like much everything else this year due to the coronavirus pandemic, is going mostly virtual. Small businesses always face a lot of challenges. This year, with the coronavirus pandemic posing myriad new operational and financial problems, things are even more difficult. During the Small Business Administration's (SBA's) celebration of this year's National Small Business Week, which runs through Sept. 26, the Internal Revenue Service has been highlighting some tax breaks for these companies. Key among those breaks are credits that can help smaller employers. Tax credits are particularly welcome because they provide dollar-for-dollar tax savings.... Read more →


Representatives also introduce legislation to overturn executive payroll action, which also affects members of the military. Internal Revenue Service workers are among the federal employees who will see their upcoming paychecks reflect Donald Trump's payroll tax deferral order. Some lawmakers say workers should get to make the final decision on their withholding. (Photo by David Boeke via Flickr) Maryland and Virginia, the two states that border the District of Columbia, are home to hundreds of thousands of federal employees. So it's no surprise that the four U.S. Senators representing those states — and workers who get checks from Uncle Sam... Read more →


Donald J. Trump's payroll tax deferral for employees technically took effect this week. But most employees shouldn't expect to see a minimal raise in their next paychecks. The reason is that few businesses jumped right in there on Sept. 1, the effective date of Trump's Aug. 8 White House memo, to stop withholding their workers' 6.2 percent portion of pay that goes toward the Social Security trust fund. Employers' reluctant choice: Yes, the decision to temporarily stop this segment of payroll withholding is voluntary on the part of companies. Employees, however, don't have the choice of opting in or, if... Read more →


If you're counting on a slightly bigger paycheck as 2020 winds down due to Donald J. Trump's presidential payroll tax pronouncement, don't hold your breath. Trump's Aug. 8 executive memo called for the deferral of the 6.2 percent employee portion of the Federal Insurance Contributions Act (FICA) tax that goes toward Social Security. The White House said it would be an easy way to provide relief for Americans during the COVID-19 crisis. Others, however, weren't so sure about the proposal, especially the easy claim. Almost immediately after the executive memo was released, questions were raised by potentially affected employees, the... Read more →


Being your own boss is a challenge even in good times. Now, with the COVID-19 pandemic disrupting your personal and professional life, keeping your individual enterprise operating is particularly dicey. So you probably were thrilled when Donald J. Trump took executive action last weekend to establish a temporary payroll tax holiday. Since you're both the boss and employee, that means that you pay both those components of the Federal Insurance Contributions Act (FICA) payroll taxes. Getting to hold off paying at least some of your employee portion certainly could help with your cash flow. Or not. Right now, Trump's executive... Read more →


Donald J. Trump announced on Aug. 8 four executive actions to provide COVID-19 relief in the wake of the stalled Congressional talks. (White House photo via Twitter) By now everyone knows that Donald J. Trump decided to literally take COVID-19 relief into his own hands yesterday. Sitting at table in a meeting room at his Bedminster, New Jersey, golf club, surrounded by media and club members who served as a smaller surrogate rally crowd to cheer him and boo the reporters, Trump sign four executive actions. One was a formal Executive Order. The other three were memoranda. He and his... Read more →


UPDATE, July 28, 2020: We finally know how the Senate wants to handle additional COVID-19 economic relief. The GOP-crafted Heath, Economic Assistance, Liability Protection and Schools (HEALS) Act, like the already passed Democratic House bill, provides for another round of stimulus payments, but isn't quite as generous as far as dependents. It also drastically reduces federal unemployment assistance. Details on this opening gambit are in these articles from The Washington Post and CNBC. Washington, D.C. watchers are used to federal lawmakers' last-minute struggles to create and pass legislation. Often though, we have to wait until the end of the year.... Read more →


UPDATE, July 23, 2020: The White House has dropped its push for a payroll tax cut as part of the next round of COVID-19 relief. Although Donald Trump cited Democrats' objections to the payroll tax cut, top Senate Republicans also disliked the idea, seeing it as too expensive as they struggle to craft a relief version to counter the already-passed House bill. Federal lawmakers are working on the next COVID-19 relief package. Specifically, Republican Senators are working on a stimulus deal since House Democrats, who control that Congressional chamber, approved their proposal back in May. But in addition to dealing... Read more →


A first job is a major life event with obvious major tax implications. Other momentous changes throughout our lives involve taxes, too. As COVID-19 continues to spread across the United States, the White House has decided to follow state and local officials in urging continued social (aka physical) distancing. For millions of us, this new April 30 stay home recommendation means more time cooped up with loved ones. Or not-so-loved ones. My favorite non-medical virus-related debate right now is whether all the coronavirus forced togetherness ultimately will end with a baby boom (coronials, anyone?) or a marriage bust. While the... Read more →


The House-passed H.R. 6201, Families First Coronavirus Response Act does not — I repeat, does NOT — include a change in the upcoming federal tax filing and payment deadline. That did happen, but separately, as detailed in my April 15 Tax Day deadline and delay Q&A post. There's also no change to the payroll taxes that come out of our paychecks. So right now, expect your regular pay to remain the same. And keep working on those federal tax forms with April 15 as your deadline. What we do know, however, is that legislation to deal with coronavirus' health and... Read more →


Every salaried worker is well aware of payroll taxes. These are taxes that come out of our earnings and go toward the Federal Insurance Contributions Act (FICA) programs, or what we know as Social Security and Medicare. Or, as the old first-time worker joker goes, "Who the heck if FICA and why is he getting some of my money?" FICA for now: Each FICA component is a percentage of a workers' pay and is paid by both the employer and employee. The total Social Security tax is 12.4 percent, split evenly between the two tax sources every pay period. The... Read more →