What is the Payroll Tax? What is the Deferment? Why did they implement the deferment? What should I do to prepare for the higher taxes in 2021? This is not a payroll tax cut but part of the Cares Act of March 2020 that gave most Americans the first stimulus check.
Amy is a Military Spouse and Financial Coach. She desires to educate everyone she can on the importance of taking control of their financial circumstances. She brings you budgeting help for your personal finances.
Why a Checklist?
To accompany the recent article about Budgeting for the Payroll Tax Deferral 2020 I have made a free savings checklist to make sure that you are preparing yourself and your financial household since there is still little known about the repayment of the payroll tax.
How Much Should I Save?
The paycheck that you received on September 1st was still getting the 6.2% Payroll Tax deducted. Starting on September 15th your paycheck will not have the Payroll Tax taken out. Your future paychecks from September 15th up to and including December 15th will not have the Payroll Tax deducted.
This might sound great and that you will have extra money but don't be fooled! As of right now you will need to pay back the tax starting with your January 1st paycheck.
You should be saving the entire amount for the repayment of taxes.
Payroll Tax Deferment Savings Checklist
Here is an example of the checklist already filled out with "pretend" numbers.
Notice that you will be taking the difference between all future paychecks and the original amount you earned on September 1st.
***One thing to remember and account for is if you have any pay raises coming before the end of the year. You will need to watch your LES or pay stub to make sure you are setting aside the 6.2% on taxable income.
to download a Free Blank Payroll Tax Deferment Savings Checklist
For more printable options to help with your budgeting check out my Free Printable Page
If you are still a little unsure about the payroll tax please check out Budgeting for the Payroll Tax Deferral 2020