As part of our ongoing efforts to keep you apprised of the developments regarding the August 8, 2020, Presidential Memorandum providing temporary deferral of Social Security tax withholdings, we report today that the Defense Finance and Accounting Service (DFAS) has announced that DFAS will defer withholding for both civilian employees and military members.¹ Furthermore, neither civilian employees nor military members are eligible to opt-out of such deferral.
This development follows on the heels of the IRS’s September 3, 2020, monthly payroll industry teleconference after which Bloomberg Tax and Accounting reported that:
[t]he federal government chose to implement the deferral of the employee portion of Social Security tax ‘for all executive branch agencies and their eligible employees,’ the General Services Administration’s payroll team said Sept. 3 in an update to its set of frequently asked questions and answers regarding the deferral.²"
In its recent announcement, DFAS provided that it will temporarily defer Social Security tax withholding of both military members and civilian employees. Specifically, DFAS separately addressed military members and civilian employees as follows:
Significantly, DFAS emphasized that: (1) neither military members nor civilian employees are eligible to opt-out of the deferral “if their Social Security wages fall within the stated limits,”⁵ and (2) that the deferrals will occur automatically.
DFAS also explained that “collection of the deferred taxes will be taken from your wages between January 1 and April 30, 2021, for both military members and civilian employees.”⁶ According to DFAS, upon any separation or retirement in 2020 before the Social Security tax can be collected, that departing or retiring civilian employee or military member is responsible for the Social Security tax repayment.
If you need help with your Social Security tax, please contact our tax team at 410-862-4220 or fill out our online form for any questions.