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Update Regarding Federal “Payroll Tax Holiday”

Published on Thursday, September 3, 2020

On August 8, 2020, a memorandum was issued a to the Department of the Treasury recommending a temporary deferral of certain payroll taxes, specifically Social Security, for individuals making less than $4,000 per bi-weekly paycheck. The temporary deferral would last from September 1, 2020 until December 31, 2020. It is important to note that deferring, or postponing, payroll taxes does not necessarily mean these taxes won’t be owed at tax time.

On September 1, 2020, the Department of Treasury and the Internal Revenue Service published guidance regarding the memorandum (PDF), stating that an employer’s participation in the payroll tax holiday is not required. If an employer does choose to defer payroll taxes for the remainder of 2020, the postponed payroll taxes would then be paid back between January 1 and April 30, 2021; this means that employees would see double payroll tax deductions (the postponed amount + their regular withholding amounts) on their January through April paychecks.

After careful analysis, the State of Washington has decided they will not be temporarily deferring payroll taxes for state employees. As the University of Washington is a state employer, the UW will also not be deferring payroll taxes; employees will continue to see their regular Social Security taxes withheld on their paychecks and will not see any changes related to this tax holiday.