GEOTUS Payroll Tax Holiday?

I guess they're saying you could inadvertently bump up to the next marginal tax bracket because you're not paying the payroll tax anymore.

I don't know if that's true or not. I would imagine someone familiar with the interplay of those taxes could chime in.

That's stupid. You're taxed on your gross income, and that doesn't change.

Now, if your employer (who already figures that 7.4% amount as part of your compensation) decided to pay that amount DIRECTLY TO YOU, then you might nudge up to a different tax bracket.

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But GROSS income doesn't... and income taxes are based on GROSS.

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Been a bit since I was involved in this but I am pretty sure SS and Medicare is not taxed, I guess it is theoretically possible if they decide to forgive one or the other your income tax liability could go up but not more so than what was forgiven.

Your income does not increase. That paragraph is flat wrong.

All of this is a glaring example of how Americans have been seduced by the insidious evil that is withholding, the income tax, and "take home pay."

As shown in my example above, we'd all be making loads more if our employers paid us the entire amount of our compensation that it costs them to hire us, and the Treasury were funded by something much simpler like the National Retail Sales Tax as outlined in H.R. 25.

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The SS/FICA amount is approximately 15%, you pay half of that directly, and your employer pays the other half "for you."

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Is the whole thing deferred or just the employee portion? I could very well be mistaken, but I thought it was just the employee portion. If not, I see what you are saying.

What a horribly written article.

What I think they are trying to say is this. If someone pays the payroll tax on your behalf, then you have imputed income in the form of the tax paid by someone else.

Example, let's say you have a nanny. Your nanny is considered your employee. You pay your nanny $1,000 per week. No taxes are withheld, you just give her $1,000 a week.

But she still "owes" the employee portion of FICA. Ultimately, that was paid by the employer on her behalf. So, her income, for income tax purposes, is "grossed up".

It's as if her actual earnings were $1,082.84 per week, and she had $82.84 withheld for her share of FICA, and she got $1,000 net (assuming she had no federal or state income tax withholding).

For income taxes, she's taxed on that $1,082.84.

The article is trying to imply that if the SS employee share isn't withheld by the employer, but is ultimately paid by the employer (out of the employer's funds), then, a similar calculation would apply here.

Look, I know people like Trump on here, and I understand what he's wanting to do, but this EO is the single biggest piece of garbage I've ever seen come out of DC.

It's going to create so many problems that most companies will say F it and not go along, which is what I am advising my clients to do currently, unless we get new information.

He has the authority to suspend payment of payroll taxes, just like he has the authority to suspend payment of income taxes / tax filings, for a period of time.

But he doesn't have the authority to FORGIVE those taxes.

So, business don't withhold, employees net goes up, from Sept to Dec. Great. What happens in Jan when those taxes are now due?

Individuals are going to owe all those "un-withheld" taxes in January. That's not going to go well.

What if the employee quits? How does the employer get the money back from the employee, to pay the employee share of the taxes?

Under CARES act, companies can already suspend paying the employer share of SS tax until Dec 31 2021 and Dec 31, 2022, and that's a pain by itself, and that only involves the company's own funds.

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Smart employers will keep that money aside in an interest bearing account,

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Which means they are still collecting it from the employee, which goes against what I think was the intention of the EO.

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and the employer has already written that amount off as part of the cost of keeping you on as an employee.

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Not necessairly. The employer portion is deferred, half until 12/31/2021, and half until 12/31/2022. You generally can not deduct an expense, under tax law, that has that long of a gap between accrual and payment.

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Which means they are still collecting it from the employee, which goes against what I think was the intention of the EO.

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I don't believe the EO does anything to force the employee to stop deductions.