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How much will I save due to the Trumps executive income tax holiday

 
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Level 15
Level 15

How much will I save due to the Trumps executive income tax holiday

The presidential memorandum deferring the payroll tax applies only to Social Security tax (6.2%), not to Medicare tax. Also, it applies only to employees whose gross pay is less than $2,000 per week.

 

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Level 15
Level 15

How much will I save due to the Trumps executive income tax holiday

What do you mean by "executive income tax holiday"? Are you talking about the deferral of payroll taxes? If that actually gets implemented you won't save anything. He's not eliminating the taxes, just deferring them to next year instead of this year. You'll pay the tax in 2021 instead of in 2020.

 

Level 15

How much will I save due to the Trumps executive income tax holiday

If implemented, your employer would stop collecting Social Security and Medicare tax, so whatever you currently see as those tax amounts on your paycheck will go away.  Since the executive order is only a deferral, or delayed collection, you would still owe those taxes when you file your tax return.

 

I think that the president is betting that if Republicans win the fall election, they will make the tax cuts permanent, and if the Democrats win the election they won’t want to start their time in power with something that will be seen as a big tax increase, and will also make the deferral permanent.  Since the deferral does not take affect until September 1, the president could also rescind it if congressional leaders agree to a different stimulus proposal.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Level 15

How much will I save due to the Trumps executive income tax holiday

The Social Security & Medicare tax deduction is 7.65% of you pay.  So you would save that.

Level 15
Level 15

How much will I save due to the Trumps executive income tax holiday

The presidential memorandum deferring the payroll tax applies only to Social Security tax (6.2%), not to Medicare tax. Also, it applies only to employees whose gross pay is less than $2,000 per week.

 

View solution in original post

Anonymous
Not applicable

How much will I save due to the Trumps executive income tax holiday

nothing.  what he did with the EO was to defer the collection of the social security tax for 2020 to 2021. so you get to pay back whatever the cut is.  the next question is whether the EO is legal under the law.  we'll have to see what the IRS says. 

Level 7

How much will I save due to the Trumps executive income tax holiday

Wow,  I did not know that the intent is to claw it back next year. What a disaster that is going to be for those who are depending on tax refunds. 

Disclaimer: Not a tax professional. Information gathered from internet links. Anything dated in June 2019 was posted in prior years and is before the 2019 limits and changes.
Anonymous
Not applicable

How much will I save due to the Trumps executive income tax holiday

if it does go into effect it will be a disaster for Social Security.    Some people will not have the ability to repay.  Other people will die and their estates will not have the money. I'm not even sure there's a provision in EO as to what's to be done if a taxpayer dies even assuming their estate has the ability to repay.  

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