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Payroll Tax Deferral Explained #payrolltaxcut #taxholiday #quickvid - YouTube
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hey guys welcome to the purpose of money
this is where we talk about
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all things money and i want to make sure
that we
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know exactly what the temporary payroll
tax cut
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means we're going to talk about the tax
holiday and how it will impact your
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paycheck
if you qualify to have your taxes
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deferred
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so here's the deal in august president
trump
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decided that he wanted to
give a tax cut quote unquote
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to americans because he didn't get that
put into the cares act like he wanted to
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so he signed an
executive order requiring that starting
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september first
taxes could be deferred or delayed in
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payment
for certain employees and basically
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made it a requirement for federal
employees
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and optional for others so your employer
may or may not choose to defer your
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taxes but if you're a federal employee
chances are
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you don't have a say i'm a federal
employee and i've already been told by
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my agency i cannot
opt out of this process so
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basically if your employer decides to
participate
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then you will see an increase in your
paycheck between september 1st
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and december 31st because the 6.2
percent of your paycheck that used to go
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to taxes
is not going to be taken out but don't
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get too excited
because starting january 1st until
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april 30th your employer will then be
required to take that amount of money
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out of your paycheck in addition to the
regular 6.2 percent in taxes
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you normally pay in your paycheck so
bottom line
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is you're going to get slightly more
money in each paycheck between
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now and december 31st if your employer
participates in the in the tax holiday
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however in january
you have to start paying this money back
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it's not
a free win for you it's just deferring
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taxes you would have paid
between september to december the other
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thing that you really need to know
is that this doesn't apply to everyone
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the tax cut or the deferred taxes
is actually only supposed to be applied
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towards people who make
four thousand dollars bi-weekly or
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a hundred and four thousand dollars per
year
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if they're salary employees so keep this
in mind as well
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okay it's not gonna impact everyone if
you make more than a hundred and four
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thousand dollars a year
you will not see the deferred taxes in
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your
paycheck okay last but not least
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there is hope that congress and the
president
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will figure out a way to make it so we
don't have to pay this money back
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next year but that is not a guarantee
so unless there is legislation or an act
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of congress that says this money is
forgiven
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you will be expected to pay these
deferred taxes back
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in 2021. so in summary
anyone who takes advantage of the tax
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holiday if your employer decides to
defer your taxes from september 1st to
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december 31st
here's what's going to happen you're
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going to get a higher paycheck between
now and the end of the year
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you're going to get a lower paycheck in
january
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and through april of next year when
you're repaying back the deferred taxes
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so my advice to you if you're definitely
dependent on your paycheck
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income is to try to save the
extra money that you're going to get in
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your paycheck now so you can afford
next year when the money is being paid
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back and your paycheck is lower
keep this in mind guys this is not a
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windfall unless
this legislation goes forward in order
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to allow forgiveness of this money
you will be expected to pay it back next
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year and you will have a lower paycheck
in the beginning months of 2021.
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so make sure to manage your money wisely
put it to the side in savings but don't
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spend it and so you know for sure
it's not going to have to be paid back i
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hope that sums up the tax
credit or tax holiday as some people are
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calling it if you have any questions or
comments please make sure to leave them
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in the box below and if you like the
content
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please make sure to share and subscribe
i'm always looking to share money tips
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and i'm here to help women build wealth
check out the channel for more
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inspirational stories about women
entrepreneurs and nine to fivers
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who are crushing it and helping build
wealth for their family
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hope you enjoyed this quick video on the
tax holiday
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