During the fall of 2020, the United States federal government allowed a deferral of payroll taxes (Social Security taxes) from paychecks from September 2020 through December 2020. If you had payroll taxes deferred during these months, you’ve likely been paying back these taxes throughout 2021. The taxes are due to be paid in full by January 3, 2022. If you continued constant employment throughout this time, your employer should have worked with you to (or automatically) started repayments in January. If you changed employment during this time, you may be responsible for repaying your deferred payroll taxes by January 3, 2022.
If you’ve been paying back your deferred payroll taxes throughout 2021, you’ll likely get a small bump in your take home pay starting in January 2022 when paying back the deferred payroll taxes is complete. The payroll tax deduction is 6.2%, so your take home pay could go up by about 1.5% starting in January, if you’ve been paying back deferred payroll taxes. The pay increase would be about $15 for every $1,000 of earned income from your 2020 pay.
What to do with the extra money?
Everyone’s situation is different, but if you haven’t needed the money over the past year, you can probably put the extra money towards emergency savings, retirement savings, or investment savings. The more you save and invest now the larger your nest egg can grow over time.
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