09/12/2020
**ATTN HHC Soldiers on AGR/ADOS status**
Here’s what you can expect to owe on your taxes, come January. This is due to the tax relief you’ll be receiving on your upcoming paychecks!
*** Public Service Announcement ***
BLUF: Put the extra money to the side because it will be taken back the first 4 months of 2021. That could equate to a 10% drop in pay during that period.
DFAS will implement system changes to defer employees' withholding of 6.2% social security wages for those employees under the wages threshold and subject to social security tax.
DFAS will implement the guidance according to the expectation that all federal payroll providers will act in unison. As such, no payroll providers, Departments, Agencies, nor employees will be able to opt-in/out of the deferral.
The elimination of the withholding of employee deductions for the civilian employees will be effective with the pay period ending September 12, 2020. The service member pay will be effective with the September pay period; it will show on the EOM September LES but impact mid-month pay, if applicable.
DFAS will defer Social Security (Old Age, Survivors, and Disability Insurance) employees' deductions of all employees whose gross security wages are less than $104,000 per year. Applicability will be determined on a pay period-by-pay period basis and could vary according to the wages subject to withholding. The service member pay period is calculated on a monthly basis.
Please be advised that the IRS guidance is that the deferred amount of the social security tax will be collected between January 1 and April 20, 2021. This means that the rate will be 12.4% during this four-month period.
Employees should be made aware that the temporary deferral of the 6.2% social security withholding does not eliminate them from being liable for the tax should they depart from federal employment.
Please see the chart for the TOTAL that will be paid back during the first four months of 2021. (This is not per month!)
