Social Security Payroll Tax Deferral
/ Published September 10, 2020
PETERSON AIR FORCE BASE, Colo. --
In an effort to provide economic relief during COVID-19, Aug. 28, the Department of Treasury and Internal Revenue Service issued guidance on the Presidential Memorandum to temporarily defer Social Security tax withholdings. This will be effective through the end of 2020.
For military members, this is effective starting with the September mid-month paycheck. Defense Finance and Accounting Service will temporarily defer the withholding of 6.2% Social Security tax for member’s whose monthly rate of basic pay is less than $8,666.66. If the member’s monthly rate of basic pay is at or above this threshold, his/her social security tax withholding will not be affected by the temporary deferral. Military members can use their August or prior LES as a good reference for their typical Social Security tax amount. The Social Security tax will be labeled as “FICA-SOC Security” on the LES and is calculated as 6.2% of basic pay.
For civilian employees, this is effective after the pay period ending Sept. 12. DFAS will temporarily defer civilian’s 6.2% Old Age, Survivors, and Disability Insurance tax withholding if his/her wages, subject to OASDI are $4,000 or less in any given pay period. Employees can use the “Taxable Wages” on the LES as a good reference for whether they will have OASDI tax deferred. The OASDI deduction is found on civilian’s LES under the deductions tab/section.
Military members and civilians are not eligible to opt-out of the deferral if their Social Security wages fall within the stated limits. The deferral will happen automatically.
Per IRS guidance, collection of the deferred taxes will be recouped from wages between January 1 and April 30, 2021 for both military members and civilian employees. Additional information on the collection process will be provided in the future.
If a military member or civilian employee separates or retires in 2020 before the Social Security tax can be collected in 2021, they are still responsible for the Social Security tax repayment. Additional information on the collection process will be provided in the future.
“As a federal financial counselor we cannot give advice [on what you do with your money]; however, it is suggested that folks use this money wisely with the understanding that you will have to pay this back unless Congress votes to dismiss the payment in the future,” said Victor Villarreal, 21st Comptroller Squadron financial counselor.
For questions regarding the temporary deferral of the 6.2% OASDI withholding:
§ Visit the IRS website https://www.irs.gov/newsroom/guidance-issued-to-implement-presidential-memorandum-deferring-certain-employee-social-security-tax-withholding.
For more help regarding financial readiness:
§ Peterson Airman and Family Readiness Center at 719-556-6141 and ask for the financial counselor.
(The Defense Finance and Accounting Service contributed information for this article.)