On Aug. 8, a 6.2% Social Security payroll tax deferment was announced in a U.S. Presidential Memorandum, allowing employers the option to defer withholding and payment of the employee's portion of the Social Security tax from Sept. 1 through Dec. 31.
UNM will not be participating in the optional tax deferral program. Note that this program does not forgive or reduce the taxes owed by employees, it is only a deferment.
This program as designed appears to create undue financial risk and administrative burden for both UNM and its eligible employees. If UNM were to participate, eligible employees would see a temporary increase in their take-home pay through December. However, starting January 2021, the same employees would immediately have far less take-home pay than in a normal month.
UNM would be obligated to withhold twice the normal amount of payroll tax from wages paid Jan. 1 through April 30, 2021, in order to cover the uncollected employee portion of Social Security taxes from the deferral period of Sept. 1 – Dec. 31, 2020. In other words, January through April 2021 employee Social Security withholding would be at 12.4% instead of the normal 6.2%.
Questions? Contact Payroll at firstname.lastname@example.org.