Many employees may see a larger check the next time they get paid.

Beginning Sept. 1, the 6.2% tax for Social Security was deferred by an executive order signed by President Donald Trump.

Basically, the order tells employers to stop withholding what they normally do to cover the employees’ Social Security taxes through the end of the year.

Since this is a tax deferment, those withholdings will have to be paid back to the Internal Revenue Service at a later date.

“All enlisted Soldiers and NCOs, as well as most Officers and DA civilians, will see a 6.2% increase in their base pay starting with September’s mid-month pay through December 2020,” Sgt. Maj. Of the Army Michael Grinston said in an email to Department of Defense employees and members of the military. “As of now, you will have to pay this Social Security tax back January through April 2021. Bottom line, check your Leave and Earnings Statement and develop a plan. Leaders, sit down with your subordinates and discuss their plan for when the tax is recouped in 2021.”

According to the Defense Finance and Accounting Service:

Employees are not eligible to opt-out of the deferral. If your Old Age, Survivors and Disability Insurance wages are less than $4,000 in any given pay period, the deferral will happen automatically.

Based on current IRS guidance, collection of the deferred taxes will be taken from your wages between Jan. 1 and April 30, 2021. At that time, OASDI withholding will resume at a rate of 6.2%, and deferred taxes from 2020 will be collected.  

If you plan to separate, retire or transfer in 2020 before the OASDI tax can be collected in 2021, you are still responsible for the OASDI tax repayment.

The deferral will not impact those employees in retirement plans not subject to Social Security withholding.

More info can be found at www.dfas.mil/taxes/Social-Security-Deferral.

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