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Social Security Tax Deferral

Provided by HQDA ASA M&RA/DCS G-1Friday, October 2, 2020 *Updated January 4, 2021

What is it?

Social Security tax deferral is a temporary relief being provided during the COVID-19 pandemic. Based on guidance from the Internal Revenue Service, a presidential memorandum has been issued to temporarily defer Social Security taxes. The IRS deferred taxes effective from mid-September until December 2020, with no option for Soldiers and civilian employees to opt out of this deferral.

The deferral will impact individuals whose monthly basic pay is less than $8,666.66. The Department of Treasury established the temporary deferral threshold, which does not affect service members or civilians whose monthly basic pay falls at or above this threshol amount.

What are the current and past efforts of the Army?

The Army notified and educated service members and DA Civilian employees about the changes to their payroll tax withholding to allow them to plan ahead to repay the withholding of the deferred taxes through 2021.

  • Effective mid-September to December: Defense Finance and Accounting Service temporarily deferred the withholding of the 6.2% Social Security tax, to allow a larger paycheck.

  • January- December 2021- DFAS will begin collecting the tax deferment alongside the FICA tax deducted from monthly pay, resulting in less money in the paycheck of affecred employees.

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.

What continued efforts does the Army have planned?

The Army leaders encourage the Soldiers and Civilian employees to have a two-fold plan to account for the payback of the deferred social security taxes in January 2021:

  • Check: Leave and Earnings Statement in the deduction section for FICA-Social Security taxes to identify the amount deferred for the applicable pay period.
  • Adjust: tax liabilities during the January through December 2021 time period. DFAS will administer the deferral and tax liability.

To avoid unnecessary hardship that may be brought on by additional spending decisions:

  • Soldiers should consult with a Personal Financial Manager or counselor at Army Community Service, or contact Military OneSource for support .
  • Civilian employees should seek advice from a Employee Assistance Program financial counselor.

Why is this important to the Army?

Personal financial readiness is vital to overall Army mission readiness. Army encourages its force to save the deferred money, or plan to adjust their spending to accommodate the payback.

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