You are probably not up for a job review and are grateful just to be employed in this current economy. How then can you possibly receive a salary increase? On August 8, 2020 the President signed an Executive Order deferring payroll tax obligations from now through December 31, 2020. Here is the good, the bad and the ugly.
If you qualify for this temporary payroll tax deferment the result would be a 6.2% salary increase to your net pay, if your bi-weekly wages are $4,000.00 or less. The deferred or suspend payments will not be due until January of 2021. This payroll tax deferral became effective on September 1st, 2020 and will continue until December 31, 2020. If planned correctly, you can use this additional income to pay off some of your debt and other financial obligations.
You are not eligible for this deferral program if your bi-weekly income is $4,001.00. Any bi-weekly amount exceeding $4,000.00 will cancel you out. The choice to participate in this program is not yours but that of your employer. If your employer is not participating in the payroll tax deferral program, you are out of luck.
Furthermore, since this is a deferral and not a tax forgiveness program you will have to repay the deferred amount beginning in January of 2021. This means that you will have to repay the deferred amounts and still have your current withdrawals occurring in January 2021 as scheduled. In short, your take home pay commencing in January 2021 will be less.
In a few months some of you may qualify for a bonus from your job. Receiving a bonus in some cases may exclude you from one or more payroll bi-weekly deferment. Additionally, overtime pay may have a similar impact on your bi-weekly payroll deferment and net income. This is a tax deferment program and not a tax forgiveness program. Therefore, you have to pay the piper!