Tax directive also contains unusual ‘cliff’ cutting off any benefit for those earning more than $104,000
Millions of self-employed individuals would be left out of President Donald Trump’s move to defer payroll taxes for the last four months of the year, according to tax experts.
That’s because the executive action specifically refers to taxes paid under Sec. 3101(a) of the Internal Revenue Code, which set the Social Security tax rate at 6.2 percent for those employed by someone else. There is no similar reference to Sec. 1401(a), which requires the self-employed to pay 12.4 percent on their own wages, or both the employer and employee share of Social Security taxes.
The $2 trillion March relief package allowed companies to defer their portion of Social Security payroll taxes and pay them back in stages, half by mid-2021 and the rest a year later. That included half of the 12.4 percent rate paid on self-employment income. Continue reading.