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On-Call Support: (760) 829-0175
View the list of recurring virtual Personal Financial classes offered to individuals or units or call (760) 829-0105
Please see the below information IRT Tax withholding. Review attachments to help better communicate the message. Your Command Financial Specialist (CFS) can reach out to our Personal Finance Management (PFM) Specialist (if needed) to gain clarity so that they can get the word out to your individual units. Our PFMs stand at the ready to provide clarity. Please look out for more information to be pushed out via DFAS/MOL.
President Trump Memo deferring the withholding of all eligible employees’ 6.2% OASDI
We recently received an email informing us of that on Aug 8th, 2020, the President signed a memorandum pertaining to a payroll tax deferral.
Payroll taxes are federal, state, and local taxes withheld from an employee’s paycheck by the employer. These taxes consist of income taxes, unemployment taxes, and deductions for (FICA) Social Security and Medicare taxes.
Federal Insurance Contributions Act (FICA) consists of current tax rate for Social Security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. Combined, the FICA tax rate is 15.3% of the employees’ wages.
Specifically, the temporary change will defer the withholding of all eligible employees’ 6.2% OASDI. Those with wages in excess of $4,000 are not impacted by this tax deferral. When implemented the 6.2% OASDI deferral will be effective until 31 Dec. 2020.
The deferrals will apply to all federal employees making less than $104,000 per year, or $4,000 per pay period. Simply stated…this is a short-term loan that will need to be repaid in full, and not an increase in take-home pay. In the short term, you may see an increase in take-home pay, but unless Congress pass COVID-19 legislation to forgive the payroll taxes that is due, you will likely will be expected to pay that money back some time next year in 2021…for tax year 2020. (Ouch!) I am quite sure you will be getting calls from sales people soon with “Payroll Taxes Saving Strategies and Scams.” Take heed and extreme caution.
Meanwhile here’s a simple effective idea that will help…
I would suggest everyone use the IRS user-friendly withholding calculator to compute the dollar amount of your personal withholding. (Don’t worry; it is handy enough to compute what you will owe from now until the end of the year).
Set aside that amount each pay period in a separate saving account at your bank or credit union to pay back your taxes. You can keep the interest earned! Otherwise by some estimates, you will have to double your regular payroll tax rate during the first four months of 2021, and it is possible that if you do not do so, you will have to pay interest and penalties on amounts still owed if they’re not paid back the tax due date.
The mission of Personal Financial Management is to provide education, training, and counseling on financial matters in order to increase personal, family, and operational readiness. Money is one of the main reasons service members experience stress on the job and its one of the top things couples fight about. We believe that by helping individuals achieve financial success we can foster confidence in facing their finances and alleviate these stressors. A solid understanding of a Marine’s personal financial situation and prospects will give them and their family a better chance of achieving financial success during their career and prior to transitioning. It will build confidence in facing financial challenges and responsibilities.
The Personal Financial Management Program is designed to assist commanders in helping Marines and family members learn and improve basic financial management skills, become more informed consumers, develop and maintain credit worthiness, understand the importance of savings and investment, and reduce or maintain levels of manageable debt. We are program specialists, credentialed as Accredited Financial Counselors, who provide personal and family financial education, information, and counseling with the objective of facilitating mission readiness through improved personal readiness.
Education, training, and one-on-one coaching is available for many financial topics from budgeting/diversifying your income, credit and debt management, military/consumer protections, car buying, home options, savings and investing, financial planning for future events, clearance issues related to personal finances, financially fit children, and other financial topics.
Learn to take financial stress off, save for your children’s education, improve your personal and professional mission readiness, and reach that goal of transitioning/retiring comfortably by attending the variety of financial course/workshops/briefs we offer.