BUFFALO, N.Y. (WIVB) — Your next paycheck could have a little bonus in it because of an executive order the president signed.
They’re calling it a “Payroll tax holiday”. But that bonus could come with a hefty price tag. We’re talking about the 6.2 percent tax that you pay and your employer pays into social security. It shows up on the OASDI line. The payroll tax holiday would allow you to forego that tax in every paycheck until the end of the year.
But the plan signed by the president only delays the tax until next year and has its share of critics from both political parties. The payroll tax windfall would equal about a thousand dollars for the average worker, but come the first of the year your social security withholding would double, to pay that money back. Chris Fabian, vice president of EG Tax, says if your employer lets you keep the money, try to hold onto it.
“If you are getting the extra money, just remember, next year that money, they are going to want it back. So that is money you won’t have in your pocket for your rent. So I would keep it aside.”
But Fabian says keeping the money would defeat the purpose of the payroll tax holiday, which is designed to stimulate the economy.
The tax holiday applies to workers making less than 100-thousand dollars a year and went into effect last Tuesday, September 1. The president signed the payroll tax legislation last month,which takes a look at evictions, defers student loans, and would suspend the payroll tax until the end of the year for workers making less than 100-thousand dollars a year.
Late Monday afternoon, Congressman Chris Jacobs issued a statement saying in part, lawmakers need to negotiate an additional targeted COVID relief package to expand the Paycheck Protection Program and deliver targeted aid to American workers, farmers, and families.