BE AWARE: GOVERNMENT EXPECTS YOU TO PAY DEFERRED SS TAXES NEXT YEARFEA members are reminded that, through the end of calendar year 2020, the employee portion of OASDI (Social Security) taxes are not being withheld from your pay.
However -- AND THIS IS VERY IMPORTANT TO NOTE -- it is the position of the federal government that you will still owe those Social Security taxes and they must be paid by April 2021.
This change in your taxation was made as a result of an Executive Order from the White House. Most private employers have chosen to ignore the option of temporarily halting Social Security withholdings from their employees' pay because of the difficulties and confusion the situation will create. Federal employees, however, were given no option to opt out of the temporary tax deferral.
As a result, you will see more money in your take home pay for the next three months. But it is the government's position you will still owe these Social Security taxes, meaning you will likely be faced with a sizeable tax bill early next year to make up for the Social Security taxes not being withheld the remainder of 2020.
The government's position is that the deferred tax will be collected sometime between January 1 and April 30, 2021 -- but neither DFAS nor any other part of the federal government has shared any information yet on how they expect this to be accomplished.
FEA members are urged to keep this situation in mind and to plan accordingly, in order to avoid a severe financial shock and burden in early 2021.
Although FEA is not a financial institution, nor are we certified financial advisors, our suggestion to members is to consider setting aside the extra amount you receive in each paycheck now, so that you'll have the money ready next year when the government expects you to pay the amount back.
As always with any financial situation, we suggest members do consult with a certified tax and/or financial professional if they wish to have an expert's advice.