Military Payroll Tax Deferral 2020 | Temporary Social Security Deferral for Servicemembers

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The payroll tax deferral for military servicemembers starts with the 15 September 2020 mid-month pay. It will continue until 31 December 2020.

In summary, the payroll tax deferral will delay the collection of 6.2% of your base pay from 1 September to 31 December 2020. Unless the executive order or laws change, the deferred 6.2% tax will collected from 1 January to 30 April 2021, in addition to the normal 6.2% withheld.

This is in effect a loan that will need to be paid back, not a tax cut. Treat it like a loan and be ready for 15 Jan 2020 when your pay will be about 6.2% lower than it should be with the extra 6.2% coming out.

I recommend setting aside the extra income in an emergency fund or other savings account so you are prepared when your paycheck gets an approximately 6.2% cut 1 January to 30 April 2021.

How Much is the Payroll Tax Deferral?

Here are a few examples of how much money your Payroll Tax Deferral will be.

For a 4 year E-4, this tax deferral will mean $653 extra will be paid over the next 4 months to the servicemember, or about $81 per paycheck.

A 12 year E-6 technical sergeant will see $990 from 1 September to 31 December 2020, or about $123 extra per paycheck.

A 12 year O-4 will see about $242 extra in each paycheck or $1942 total over the next 8 paychecks.

Note that you will need to pay back an equal amount from January 1 to April 30, 2021. It will be automatically deducted from your paycheck. I recommend you save up the amount required to be paid back so you can access those funds if necessary in the first third of 2021.

Payroll Tax Deferral Per Paycheck, Enlisted and Officer

Less than 2Over 2Over 3Over 4Over 6Over 8Over 10Over 12Over 14Over 16Over 18Over 20Over 22Over 24Over 26
E-9170174178184190199207215228
E-8139145149153158167172179184194
E-797105109115119126130137143147152153159162174
E-6849296100104113117124126128129129129129129
E-57782869096103108109109109109109109109109
E-4707478828585858585858585858585
E-3636771717171717171717171717171
E-2606060606060606060606060606060
E-1545454545454545454545454545454
Under 2Over 2Over 3Over 4Over 6Over 8Over 10Over 12Over 14Over 16Over 18Over 20Over 22Over 24Over 26
O-6215236252252253263265265
O-5179202216218227232244252263
O-4155179191194205216231243251255258258258258258
O-3136154166181190199206216221221221221221221221
O-2117134154159162162162162162162162162162162162
O-1102106128128128128128128128128128128128128128
Under 2Over 2Over 3Over 4Over 6Over 8Over 10Over 12Over 14Over 16Over 18Over 20Over 22Over 24Over 26
O-3E181190199206216224229236236236236236
O-2E159162168176183188188188188188188188
O-1E128137142147152159159159159159159159
Under 2Over 2Over 3Over 4Over 6Over 8Over 10Over 12Over 14Over 16Over 18Over 20Over 22Over 24Over 26
W-5250262
W-4140151155160167174182193202212219227237246256
W-3128134139141147158170175182188200208213218225
W-2113124128130137149154160167172177183186189189
W-1100110113119127137142149156161166172172172172
Rounded to the nearest dollar

Payroll Taxes On LES

You can find your payroll deduction amount on MyPay and under the deductions section of your LES. It is listed as “FICA-SOC SECURITY”

Why is the Military Social Security Deferral Happening?

Here is the email from DFAS explaining why this is happening. Essentially President Trump issued a memo and the Department of Defense must comply, even though this will probably harm more servicemembers than it will help.

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 Social Security (Old Age, Survivors, and Disability Insurance (OASDI), as seen on the Leave and Earnings Statement (LES) as “FICA-SOC SECURITY”) tax withholdings in the pay of some service members.

Effective for the September mid-month pay, DFAS will temporarily defer the withholding of your 6.2% Social Security tax if your monthly rate of basic pay is less than $8,666.66.  If your monthly rate of basic pay is at or above this threshold, your social security tax withholding will not be affected by the temporary deferral.

Key Facts:

– The Social Security tax is labeled as “FICA-SOC SECURITY” on the LES and is calculated as 6.2% of your basic pay.
– This change is effective through the end of the 2020 calendar year and only applies to your Social Security tax withholding.  Normal withholding of your FICA-Social Security taxes will resume effective January 1, 2021.
– You are not eligible to opt-out of the deferral if your basic pay falls within the stated wage limits.  The deferral will happen automatically.
– In accordance with current IRS guidance, collection of the deferred taxes will be taken from your wages between January 1 and April 30, 2021. Additional information on the collection process will be provided in the future.
– If you separate or retire in 2020 before the Social Security tax can be collected in 2021, you are still responsible for the Social Security tax repayment.

As more information becomes available, it will be posted on:
https://www.dfas.mil/taxes/Social-Security-Deferral/

For questions on the temporary deferral of the 6.2% Social Security withholding:
– Visit the IRS page: https://www.irs.gov/newsroom/guidance-issued-to-implement-presidential-memorandum-deferring-certain-employee-social-security-tax-withholding

For more information on financial readiness:
– Visit https://finred.usalearning.gov/
– Visit your installation Military and Family Support Center and speak with a Personal Financial Manager or Counselor, or contact Military OneSource at https://www.militaryonesource.mil

All the above being said, this makes no sense as a method of relief if the money will need to be paid back in January to April 2021.

Temporary Payroll Tax Deferral for Military FAQ

What is the military payroll tax deferral?

The temporary payroll tax deferral for military servicemembers is a delayed collection of the 6.2% Social Security tax from 1 September to 31 December. The first affected paycheck is the 15 September mid-month pay. Servicemembers will see

How do military payroll taxes work?

Only your base pay is subject to payroll taxes. Payroll taxes are Federal Insurance Contributions Act or FICA. On the LES, they are listed as FICA-SOC SECURITY and FICA-MEDICARE. The Social Security tax is 6.2% and 1.45% for Medicare.

What if I am deployed and receiving CZTE pay?

If you are on a tax free deployment, you will still be affected by this temporary payroll tax deferral. Combat Zone Tax Exclusion Pay, or CZTE, only applies to income taxes, not Social Security or Medicare taxes. Look at your LES in the “Deductions” column. You should see FICA-SOC SECURITY XXX.XX and FICA-MEDICARE XXX.XX. The FICA-SOC SECURITY is the part that is being deferred.

How much is my payroll tax deferral?

You can check your Leave and Earnings Statement or LES for August 2020 and it should give you an approximate monthly amount for September to December 2020. However, if you promote or hit a new time in grade, your deferral amount will increase.

Can I opt out of the military payroll tax deferral?

No, the payroll tax deferral is mandatory for US servicemembers. If you think it should be optional, please call or write your Senator or Congressman. And vote in November.

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