{"id":5003,"date":"2020-04-27T14:20:00","date_gmt":"2020-04-27T20:20:00","guid":{"rendered":"https:\/\/web.blockadvisors.com\/?p=5003"},"modified":"2025-01-24T10:42:45","modified_gmt":"2025-01-24T16:42:45","slug":"payroll-tax-postponement","status":"publish","type":"post","link":"https:\/\/www.blockadvisors.com\/resource-center\/small-business-tax-prep\/payroll-tax-postponement\/","title":{"rendered":"Payroll tax postponement offers additional relief for employers"},"content":{"rendered":"\n

Signed into law on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act<\/a>, is a new law intended to provide financial relief to individuals and business alike who have been affected by the coronavirus pandemic. The $2.2 trillion stimulus plan has multiple provisions, including deferring payroll taxes for qualifying employers.<\/p>\n\n\n\n

This segment of CARES Act has been called payroll tax postponement or payroll tax deferral.<\/p>\n\n\n\n

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A quick refresher\u2026 \u201cWhat are payroll taxes?\u201d<\/em><\/strong><\/p>\n\n\n\n

Payroll taxes are amounts withheld from employees\u2019 wages by their employer. Payroll taxes include Federal income tax withholding, and the employee\u2019s portion of Social Security, and Medicare. These taxes are deducted from an employee\u2019s earnings and paid directly to the IRS. Additionally, employers send their portion of Social Security and Medicare taxes with the employees\u2019 portion when they deposit taxes.<\/em><\/p>\n\n\n\n

Federal income tax withholding can be 0% or higher depending on the taxpayer\u2019s W-4. Social Security and Medicare is 7.65% for the employee portion withheld from their gross pay and the employer also pays 7.65% for their portion when they deposit the employee\u2019s portion (6.2% is Social Security and 1.45% is Medicare.)<\/em><\/p>\n<\/blockquote>\n\n\n\n

What part of payroll taxes can employers defer with payroll tax postponement?<\/h2>\n\n\n
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\"employee<\/figure>\n<\/div>\n\n\n

As part of the CARES Act, employers can defer payment of the employer\u2019s portion of Social Security taxes payments and certain railroad retirement taxes. In normal circumstances, an employer must remit 6.2% of an employee\u2019s pay for Social Security for each W-2 employee on a bi-monthly or monthly basis.<\/p>\n\n\n\n

Is this a payroll tax credit?<\/h2>\n\n\n\n

No, the payroll tax postponement program is not a tax credit. If you\u2019re looking for a CARES Act-sponsored tax credit, read more about the Employee Retention Tax Credit<\/a>.<\/p>\n\n\n\n

Are there any payroll tax suspension exclusions?<\/h2>\n\n\n\n

The payroll tax suspension excludes:<\/p>\n\n\n\n