JOINT BASE SAN ANTONIO-LACKLAND, Texas – Beginning next week, military and civilian employees will see a slight boost in their paychecks following a Presidential Memorandum temporarily deferring Social Security tax withholdings for the remainder of 2020.
However, the 6.2% increase must be paid back, starting with the first paycheck in 2021.
The government instituted the deferral as a form of COVID-19 relief, said Chief Master Sgt. of the Air Force JoAnne Bass in a Sept. 7 Facebook post.
The chief, who posted that she’s been getting a lot of messages about the payroll tax deferral, noted the extra 6.2% of earnings normally garnished for Social Security tax will need to be paid back early next year.
The deferment – for military members with a monthly basic pay of less than $8,666.66 and civilian employees earning less than $4,000 a pay period -- goes in to effect automatically with no opportunity to opt out.
Some nonappropriated fund employees, those in the alternate and Europe cycle, are included in the deferral as well. They will see changes in pay periods ending Sept. 9 or Sept. 16.
Several military leaders, as well as the Air Force Installation and Mission Support Center first sergeant, recommend putting the 6.2% aside so it’s readily available in the new year.
“For those that don’t have the ability to put deferment into savings, I recommend using the money smartly,” said Senior Master Sgt. Eric Peterson. “Don’t make big purchases, seek advisement from financial planners – a free service is available through military and family readiness centers – and stay ahead of your finances if at all possible."
Peterson also recommended:
• Visiting the www.militaryonesource.com web site for information and financial resources
• Contacting financial institutions or creditors directly to talk through options if finances are tight
• Staying away from payday loans or any other institution with high interests rates
• If military members are truly in a bind, consider monetary assistance through the Air Force Aid Society
Finally, “be humble and do not wait until you are in a financial bind to do something about it,” the first sergeant said. “Stay proactive and ask for help. I’d much rather ask for help before I fall into a hole than try to claw my way out … there are many people who want to help … but they need to know you need the help.”
Current IRS guidance states collection of the deferred taxes from wages runs Jan. 1 – April 30, 2021. More details on repayment are expected at a later date.
Although some believe there’s a remote chance the taxes will be forgiven, “plan on paying it back,” Peterson said. “This will help keep your mindset where it needs to be.”
The Defense Finance and Accounting Service web site at https://www.dfas.mil/taxes/Social-Security-Deferral/ includes more information on the deferral as well as frequently asked questions sections for both military and civilian members.