Explaining The Payroll Tax
Many have been left confused by President Trump's executive order suspending the payroll tax and the impact that could have on your future tax returns. NBC's Dan Scheneman reports.
(NBC News) — Economic experts are warning that PRESIDENT TRUMP’S EXECUTIVE ORDER suspending the payroll tax could have a major impact on your future tax returns.
It defers the roughly six-percent tax that is collected every time you get paid.
That money is not like the stimulus checks Americans received earlier this summer as part of the $2 trillion cares act.
“We’re not getting a tax cut with this,” explains Bankrate.com Senior Economic Analyst Mark Hamrick. “We’re simply delaying the collection of a tax which is basically collected among employees on an ongoing basis to fund the Social Security system.”
That delay could add up to thousands of dollars you will have to pay back.
“You’re not getting essentially the elimination of the tax,” Hamrick says. “You’re simply being told you’re going to have to pay this at the first of the year.”
Hamrick says the executive order is designed to help those Americans who are collecting a paycheck, but not the more than 10-percent currently unemployed.
The president signed this and other executive orders because congress has been unable to agree on a second stimulus package.
“Republicans don’t like the idea of payroll tax cut for the very same reason that don’t and that it doesn’t solve the problem,” Hamrick notes.
Hamrick says if the legislation goes through, employees should try to save that money for the eventual tax bill.
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