Will the Proposed Payroll Tax Cut Affect my R&D Credit?
As the coronavirus wreaks havoc on the global economy, President Trump has proposed to cut the payroll tax for employees to zero for the rest of 2020. Money taken in from payroll taxes goes to Social Security, Medicare, and unemployment insurance. Salaried workers pay 6.2% of their gross annual income up to $137,700 for Social Security. Employers also pay a 6.2% tax.
The proposed payroll tax cut does not affect employers or their R&D tax credit. At this point, the proposed payroll tax cut is for employees only and is meant to incentivize individuals to buy goods and services amidst an economic downturn. President Trump believes the spread of COVID-19 could cripple economic growth by decreasing consumer spending and ultimately hurting businesses.
The proposed payroll tax cut does not affect employers or their R&D tax credit.
It is important to note the proposed payroll tax cut is just that – a proposal sparking conversation on how to halt further economic downturn due to the COVID-19 outbreak. President Trump’s proposal also includes allowing Americans to delay filing their tax returns in April, reimbursing people or companies for sick leave, and providing aid to the travel industry. There have not been any specifics on how this would be implemented.
One thing is for certain, there is significant interest in a bipartisan proposal. Both Republicans and Democrats want to see something done quickly that will benefit the US economy.
Our team of R&D tax credit specialists is here to help you understand how the current events affect your R&D tax credit. Contact us today to schedule a free consultation with one of our tax experts.