Social Security payroll tax deferral to begin this month
In order to provide relief during the COVID-19 pandemic, a presidential memorandum was issued Aug. 8 and guidance followed from Internal Revenue Service Aug. 28, to temporarily defer Social Security — Old Age, Survivors, and Disability Insurance tax withholdings. This change is effective through the end of the 2020 calendar year.
Military Members — Effective for the September midmonth pay, Defense Finance and Accounting Service will temporarily defer the withholding of a service member’s 6.2% Social Security tax if his or her monthly rate of basic pay is less than $8,666.66. If the individual’s monthly rate of basic pay is at or above this threshold, his or her Social Security tax withholding will not be affected by the temporary deferral. Military members can use their August or prior leave and earning statement as a good reference for their typical Social Security tax amount. The Social Security tax is labeled as “FICA-SOC SECURITY” on the LES and is calculated as 6.2% of basic pay.
Civilian Employees — Effective pay period ending Sept. 12, DFAS will temporarily defer the individual’s 6.2% OASDI tax withholding if his or her wages, subject to OASDI are less than $4,000 in any given pay period. Employees can use the “Taxable Wages” on the LES as a good reference for whether they will have OASDI tax deferred.
The OASDI deduction is found on the individual’s LES under the deductions tab/section.
Military members are not eligible to opt-out of the deferral if their Social Security wages fall within the stated limits. The deferral will happen automatically.
Civilian employees are not eligible to opt-out of the deferral if their Social Security wages fall within the stated limits. The deferral will happen automatically.
Per IRS guidance, collection of the deferred taxes will be taken from wages between Jan. 1 and April 30, 2021 for military members and civilian employees. Additional information on the collection process will be provided in the future.
If a military member or civilian employee separates or retires in 2020 before the Social Security tax can be collected in 2021, they are still responsible for the Social Security tax repayment. Additional information on the collection process will be provided in the future.
For questions on the temporary deferral of the 6.2% OASDI withholding, visit the IRS page at 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 www.finred.usalearning.gov, visit the installation Military and Family Support Center to speak with a personal financial manager or counselor or contact Military OneSource at https://www.militaryonesource.mil or call (800) 342-9647.