When could social security taxes be deferred?

The Coronavirus Aid, Relief and Economic Security (CARES) Act allowed employers the opportunity to defer the employer portion of Social Security taxes for any payroll paid between March 27, 2020, and December 31, 2020.

 

When will the payment for deferred taxes be due?

If you took advantage of this relief, the first half of the deferred taxes will be due soon.  To be considered as paid timely, payment must be made by:

December 31, 2021 (because this is a holiday, the actual due date is January 3, 2022), 50% of the deferred taxes and December 31, 2022, the remaining 50% of the deferred taxes.


Tax Planning Opportunity

Cash basis taxpayers can opt to make their payment earlier in December to secure a tax deduction in 2021; or make their payment on January 3, 2022, for a tax deduction in 2022.

Liabilities paid after December 31, 2021, will begin to accrue interest charges and penalties.

 

How do you pay the deferred payroll taxes?

  1. Log in to the Electronic Federal Tax Payment System at www.eftps.gov
  2. Check the box on the left to make a tax payment and choose “941 Employers Federal Tax” from the “Select a Tax Form” drop down box.  Click next.
  3. At the Tax Type Selection, choose “Deferred Social Security Tax”.  Click next.
  4. Enter your payment amount, the calendar quarter to which the deferral is attributable, the year 2020, and the date you’d like the payment to settle.  Click next.
  5. Click “Make Payment” and keep a copy of the payment confirmation for your records.

If you have any questions or concerns, do not hesitate to reach out to us so that we can advise you further.

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