CARES Act Payroll Tax Deferral - Worth It?

Today we are examining the recently passed CARES Act, and specifically section 2302 entitled: Delay of Payment of Employer Payroll Taxes. We have received many questions about how this impacts employers, as well as if it is a good or bad idea to take advantage of the deferral. We will be outlining what it means to take the deferral and its subsequent impact on employers' balance sheets. First, what is the deferral? It is a deferral on the 6.2% employer portion of social security paid as payroll taxes under IRS Code of 1986 Section 1401(a). Employers must pay back in its entirety a minimum of 50% of the deferral by the end of 2021, and the remaining portion by the end of 2022. For employers who qualify and take this deferral, we have built this chart of the effective payroll taxes that an employer will pay over the next three years (annualized).

To stay true to our 180 words, our increased cash flow solution will be our next post.