Is there a Social Security tax deferral feature in OnPay?
Not yet. In order for OnPay to implement the employee Social Security tax-deferral feature in a way that's 100% accurate and compliant, we are waiting for the Department of Treasury and the IRS to issue official guidance regarding reporting requirements. Once relevant guidance is published, we’ll implement the deferral feature in OnPay.
Some things to know:
- The payroll tax deferral is optional, and taxes that are deferred would have to be paid by the employer in early 2021.
- Employers that fail to pay any outstanding amounts by May 1, 2021, may be held liable for the tax, penalties, and interest.
- It applies to wages paid from September 1 through December 31, 2020, for workers who make less than $4,000 per biweekly paycheck (or $104,000 annually).
- Employers are permitted, if necessary, to “make arrangements to otherwise collect” the total taxes due from the employee, but the Notice is unclear on how an employer may do so.
- Employers that choose to opt in will defer the 6.2% employee portion of wages paid to Social Security.
- This deferral applies to “affected taxpayers” that have been negatively impacted by COVID-19.
- If an employee is not employed by the employer for the full four-month deferral period, the employer is still obligated to pay the total deferred taxes to the IRS.
Want to learn more? Read about the IRS Guidance on the 2020 Payroll Tax Deferral.