Military notifies employees of tax deferral implications
Last updated 9/16/2020 at 12:24pm
The Defense Military Pay Office announced that starting Sept. 15 and continuing through the end of 2020 payroll, or FICA, taxes will stop being deducted from your paycheck as a result of the payroll tax deferral executive action signed by President Donald Trump.
This will mean personnel will see a roughly 6.2-percent increase to their paychecks until the order expires at the beginning of 2021. Beginning in January the government will begin recouping this money through an automatic increase of the payroll tax that will end in April. To phrase it simply, until the end of the year paychecks will be roughly 6.2 percent larger than they were in August and starting in January they will be roughly 6.2 percent smaller than they were in August. It is imperative that personnel plan accordingly for a smaller paycheck for the first four months of 2021 as the deductions will begin automatically and there will be no way to stall or postpone the recoupment.
There is no current method to opt out of this tax deferral through the MyPay website or the Fort Carson Finance Office.
Some frequently asked questions
Why are my Social Security taxes being deferred?
In order to provide relief during the COVID-19 pandemic, a Presidential Memorandum was issued on August 8, 2020, and guidance followed by Internal Revenue Service on August 28, 2020, to temporarily defer service members Social Security (Old Age, Survivors, and Disability Insurance (OASDI)), as seen on the Army, Air Force, and Navy Service Members Leave and Earnings Statement as “FICA-SOC SECURITY”) tax withholdings. The Social Security tax is labeled as “Social Security” on the LES for the Marine Corps.
What is the Social Security tax?
Social Security tax is also called the Old Age, Survivors, and Disability Insurance (OASDI) tax and is required by law. The tax funds the Social Security program, which is administered by the Social Security Administration.
Will I be required to pay back the Social Security taxes that are deferred?
Yes. Current IRS guidance indicates the payment of the deferred taxes is postponed until January 1, 2021. The deferred Social Security taxes not withheld from wages during 2020 will be collected from your wages between January 1, 2021, and April 30, 2021. Additional information on the collection process will be provided in the future.
Where are the Social Security Taxes shown on my LES?
The Leave and Earnings Statement (LES) for the Air Force, Army and Navy member list the Social Security taxes as “FICA-SOC SECURITY” within the deductions section. For the Marine Corps this deduction is listed as “Social Security” on the LES.
Visit the Defense Finance and Accounting Service: https://www.dfas.mil/taxes/Social-Security-Deferral/Military-FAQs/