Finimpact

Frequently Asked Questions (FAQ)

Is Payroll The Same As Social Security Tax?
Payroll taxes consist of both Social Security and Medicare. So it is mostly Social Security (6.2% for each party) but also contains Medicare (1.45% for each party). In a more general sense, payroll is the payment of various types of workers, such as freelancers, fixed employees, managers, professional third-party services, etc. In order to run a smooth payroll and take care of social security obligations, you will need to make use of payroll software that automatically does it for you.
How Does Trump’s Payroll Tax Work?
Trump’s payroll tax deferral is quite simple to understand. Usually, business owners deduct (“withhold”) 6.2 % of the employee’s salary to pay for the Federal social security fund. This obligation has been deferred so that business owners can give these funds directly to employees. The employees will still have to repay these funds in 2021, as the program only lasts until September 1 to December 31. But most employees would be happy with the extra cash right now.
What Is The Benefit Of Tax Deferral?
Tax deferral is simply an instance where you will pay taxes later as opposed to paying for them today. Depending on both your expertise and your perspective, deferring tax obligations can have advantages or disadvantages. It is never nice having a large tax bill at the end of the year. However, in different industries tax deferral can have different consequences. For instance, tax-deferred retirement investing means your investments can grow tax-free, and you only pay money when you withdraw.

About the Author

Daniel Lewis

Daniel Lewis

MBA accredited investment professional

Daniel Lewis is an MBA accredited investment professional who wants to assist small business owners to gain access to finance.

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