Translations from Your Trusted Advisor.
As we approach the last quarter of 2020, now is a good time to take a look at your withholdings and find out whether you are having enough taxes withheld from your paycheck. The IRS requires 100% of prior year tax (110% for adjusted gross income over $150,00) or 90% of current year tax to be withheld throughout the year. By adjusting your withholdings before the end of the year you can avoid underpayment penalties in April.
On August 8th, President Trump issued an executive order on payroll tax deferrals for employees. The IRS has followed up that memo with Notice 2020-65. In short, employees making less than $4,000 bi-weekly can defer paying the 6.2% Social Security tax on their wages. This amount is not forgiven and will be collected from the employees’ wages from January 1 through April 30 of 2021.
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