Payroll Tax “Cut” Update
“Caveat emptor” – aka buyer beware (or taxpayer beware, in this case).
You may have heard about Trump’s recent executive order, signed August 8th, regarding a payroll tax cut. It was his original intent that these tax dollars would not have to be paid back but, as the IRS just ruled, this is no holiday. Instead, think of this tax “cut” simply as a deferral or a loan. While your paychecks may* be bigger for the final 4 months of 2020, we wouldn’t recommend spending any of that “extra” money because you’ll see smaller paychecks in the first 4 months of 2021 in order to repay those deferred taxes.
If you are one of the taxpayers who does see that extra bump in your paycheck, be prepared to stash that money away to make up for the shortfall in your pay at the beginning of next year.