Deferral of Employer Social Security Tax Payments
The CARES Act includes a provision allowing employers and the self-employed to defer a portion of social security tax payments for the remainder of 2020.
All employers are eligible to defer payment of the employer portion of social security taxes on wages paid from March 27, 2020 through December 31, 2020. There is no election to take advantage of this program.
The deferred payments must be made by these dates to be considered timely:
- On December 31, 2021, 50 percent of the deferred amount; and
- On December 31, 2022, the remaining amount.
Form 941, Employer’s QUARTERLY Federal Tax Return, will be revised for the second quarter of 2020 (April – June 2020). Guidance will be issued on how to reflect the deferred payments otherwise due.
Caution – employers remain liable for a failure to timely deposit these taxes by the dates noted above.
Eligibility with other payroll tax credits
Employers that are eligible for credits under the Families First Coronavirus Relief Act and CARES Act are still eligible to defer payment of the employer portion of social security taxes under this program.
Eligibility with the Paychecks Protection Program
Employers that have a PPP loan under the CARES Act are also eligible to defer payment of their portion of social security taxes. The Paycheck Protection Program Flexibility Act allows employers to defer these taxes, even if their PPP loan is forgiven.
Self-employed individuals may defer the payment of 50 percent of the social security tax on net earnings from self-employment income earned March 27, 2020 through December 31, 2020. The deferred payments must be made by the due dates, noted above.
More information can be found on the IRS website.
Last updated April 20, 2020