Most service members and civilian government employees will see their paychecks subject to deferral of Social Security tax withholdings for the remainder of 2020. Participation is mandatory. People who are subject to withholding of the 6.2-percent tax – known formally as Old Age, Survivors, and Disability Insurance (OASDI) – cannot opt out. The deduction is labeled on leave and earnings statements as FICA-SOC SECURITY.
The Defense Finance and Accounting Service (DFAS) published guidelines on its web site.
The suspension of the tax takes effect on the mid-September pay period for service members whose monthly basic pay rate is less than $8,666.66. Those who are at or above that threshold will not be affected by the temporary deferral.
Civilian Defense Department employees who earn less than $4,000 per month subject to OASDI will see the deduction in their pay statements effective with the pay period that ends on September 12.
People affected by the deferment should understand that they eventually will have to pay the deferred tax. Under guidelines set by the Internal Revenue Service (IRS) DFAS will recoup the deferred FICA deductions during pay periods between Jan. 1 and April 30 of next year.
Although specific details regarding next year’s recoupment are still being formulated, DFAS advised that both the deferment and recoupment will take place automatically.
Service members and civilians who are planning to retire during 2020 but before the tax can be recouped should note that they are still responsible for repaying the tax. Again, DFAS stated, details as to how this will be done are still to be determined.
The IRS is offering additional guidance on its web site. Each armed service also plans to offer additional information as it becomes available.