Deferred 2020 Employer Social Security Tax and Deferred 2020 Self-employment Tax Must Be Paid by December 31, 2021
By Michael D’Addio, Principal, Tax & Business Services
This is a reminder that you or your business may owe a payment to the Internal Revenue Service by year-end if you or your business:
- Reduced deposits made for the employer share of social security taxes due on employee wages paid between March 27, 2020, and December 31, 2020; or
- Reduced the self-employment tax otherwise due on the 2020 income tax return for the portion of the tax that is comparable to the employer share of social security tax.
Fifty percent of the amounts deferred must be paid by December 31, 2021 (with the remaining balance due on December 31, 2022).
The IRS is issuing notices reflecting the tax deferrals reported on payroll tax reports for each quarter in 2020 and the amount due on December 31 of this year. This payment must be timely made, whether you have received the notices or not.
The IRS has issued guidance stating that if an employer fails to make a timely payment, the whole amount will be due and may be subject to failure-to-deposit penalties.
For questions concerning this payment, contact your Marcum tax advisor.