Is Our Social Security In Jeopardy?

While following the tax changes this year, it’s been interesting to see how the payroll tax cut has been approached. Last summer, the idea of payroll tax cut was being heralded as a way to give workers more money in lieu of a second stimulus package. 

The problem was Social Security and how it would be funded. In 2019, payroll taxes brought in $945 billion in revenue. 89% of Social Security was funded by these very taxes.

And then payroll taxes got cut, temporarily.

Eligible businesses were able to opt into a payroll tax deferment. Neither they nor their employees would have to pay their payroll taxes, but they’d have to pay them back during the first half of next year. Look at it as a very, very short-term loan.

The current President has suggested that these loans might be forgiven. There’s also been a discussion about cutting payroll taxes permanently. During the Great Recession, payroll taxes were reduced to help workers. So this is not a new idea, nor is it a new issue. Political parties on both sides of the aisle have supported it at one time or another.

This is an open-ended question that has no political underpinnings whatsoever: How will Social Security be funded?

What we have at the moment is a payroll tax that has been suspended and opted into by some, and the source of Social Security may or may not end. For it to end, it would require 60 votes in the Senate for a payroll tax to have even the remote possibility of ending. It does seem like the issue of Social Security is not an issue to be discussed in the future any longer

Regardless of your political beliefs, whoever is elected next, is going to face the issue of our Social Security funds running out. There were concerns about them being depleted in the future, but the pandemic has brought that issue to the forefront.

The most successful businesses can quickly realign their priorities based on what their clients want and deserve. During these opening days of fall, a lot of our customers have just completed filing their Form 941s, the Employer’s Quarterly Federal Tax Return. The due date for these forms was September 15th, but that’s not to say tax season is over. For anyone who received an extension on their 2019 tax return, the due date for those is October 15, 2020.

And there’s still one more quarter to go in 2020.

For all the challenges that 2020 has brought to our country and economy, there have been large financial relief packages for employers and employees alike. With those has come a continuous wave of tax changes.

Part of being a professional is following these changes on behalf of our clients. For instance, Form 941 was being revised shortly before it the second quarter’s filings were due. That form contained 18 new lines. Having an understanding of them allows us to explain their applicability to our clients when needed.

TaxBandits

There’s still one more quarter to go before 2020 ends. As complex as taxes are, filing your Form 941 doesn’t have to be. Choose TaxBandits and make this last quarter an easy one.