John,
On August 8, President Trump signed a memorandum deferring Social Security payroll taxes between September and December 2020. The memo applies to anyone making less than $104,000 a year, or $4,000 a biweekly pay period. Employees will have to pay it back by May 1, 2021.
While business associations have called the plan “unworkable” and refused to participate, the Trump administration is forcing more than 1.2 million federal workers to be guinea pigs. They also rejected our call to allow federal workers to opt out of the tax scheme.
Read the letter sent by leading Senators to Secretary Mnuchin and Director Vought urging them to let federal workers choose whether to defer their payroll tax obligations.
Here’s why Trump’s Social Security Tax Scam is a bad idea:
- You will be stuck with a large tax bill at the end of the deferral period.
- You will have to pay double your tax rate during the first 4 months of 2021.
- If for any reason you can’t pay it back during the first four months, you are on the hook for the tax plus interest, fees and penalties.
- If for any reason you can’t pay it back during the first four months, you are on the hook for the tax plus interest, fees and penalties.
- Your paychecks will be smaller next year due to a new tax liability.
- This action is not meaningful relief from the economic situation caused by COVID-19, just a deferred tax bill with potentially disastrous effects for you and for the Social Security system.
What AFGE recommends:
- Review a recent pay stub to see how much is taken out of your paycheck for Social Security taxes.
- Set aside this money each pay period so you will have the funds on hand when the deferred taxes are due next year so that you don’t fall behind on paying your bills due to a smaller paycheck during the first quarter of 2021.
In Solidarity,
AFGE
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