Payroll tax deferral means more money on your paycheck, but you may have to pay it back, financial experts warn

CHICAGO (WLS) -- You may be getting more money in your paycheck starting next week, but an I-Team investigation into the so-called "tax holiday" breaks down why you may not want to spend the extra cash just yet.

A little extra cash on your upcoming paychecks may offer some relief right now during the pandemic to pay the bills - especially if someone in your family lost a job.

However, the I-Team found that this extra money in your paycheck could come with strings attached.

It is known as a "tax holiday" or a payroll tax suspension and is part of President Trump's recent executive order on COVID-19 relief.

RELATED: Payroll tax suspension to start in September could increase employee take-home pay

Press play to hear what a CPA has to say about paying the tax back.

If you make under $100,000 a year, you'll see the extra money in your paycheck starting September 1, but that cash is coming from taxes you pay to fund social security.

"So you'll see a raise, so to speak, about 6% that normally your employer would withhold and submit to the federal government," said Forbes advisor and personal finance expert Lisa Rowan.

But the big question remains whether you should be spending the money if you don't have to. Rowan said if you do, spend with caution because you may have to eventually pay that money back.

"The president does not have the authority to forgive payroll taxes long-term, but he does have the ability to defer them," she said.

When asked what happened if we do have to eventually pay it back, Rowan says that is still up in the air.

"What you can expect is that, come January, that money is going to be due back to the government," she said. "So either you're going to have it on your annual tax return that you're going to have to pay, or there's going to be some sort of additional withholding that you're going to have to do for your employer."

Rowan advises keeping an eye on updates from the IRS for guidance because your employer will probably not be able to help you opt-out of the tax holiday.

"They basically flip a switch on whether they're going to withhold that amount of taxes but there's so much administrative work for doing an individual solution for all of their workers, you won't be able to go to your HR department and say, 'Hey, I just want you to hold on to that money,'" Rowan said. "Consumers definitely need to be thinking about how much that money is going to be, and whether they really need to use it right now or they can stash it away."

If you don't need this money, financial experts say you may want to ask your HR department how much extra money is going to be in your check.

You may also want to plan on taking that amount every paycheck and putting it in a separate saving account until more is known about what you may owe back to the government.