JACKSONVILLE, Fla. – Employers are deciding whether they want to participate in President Trump’s payroll tax holiday.
The tax deferment, or tax delay, is part of an executive action the president signed in August to give workers bigger paychecks.
“Next paycheck, the companies can enact it,” said Adam Wolf, a certified public accountant.
The president of Wolf Retirement says in the long run, the program could cause more confusion than help.
“I think it’s more of a pain than not,” Wolf said.
Here’s how the Payroll Tax Deferment works.
Starting Tuesday, employers can decide whether they want to opt in to the program.
The 6.2% that a company contributes to an employee’s Social Security and Medicare will stay in the company’s pocket, and the employee’s 6.2% contribution will stay in their paycheck.
In total, 12.4% of an employee’s paycheck will be owed back to the IRS.
“If you make four grand a month, you’re going to make an extra 250 bucks a month, which sounds great. September, October, November, December, now you get to January and you’re going to have to pay that back,” explained Wolf.
By law, only Congress has the power to waive taxes. President Trump only has the power to defer those payments.
Any extra money will need to be paid back in full by April next year.
The earning cutoff is $104,000 a year.