Hey Compliance Warriors!
The Internal Revenue Service today reminded employers and self-employed individuals that chose to defer paying part of their 2020 Social Security tax liability that their second annual installment of the deferred amount is due on December 31, 2022.
As part of the COVID relief provided during 2020, employers could choose to put off paying the employer’s share of their Social Security tax liability, which is 6.2% of wages. Self-employed individuals could also choose to defer a similar amount of their self-employment tax. Generally, half of that deferral was due on December 31, 2021. The other half is due on December 31, 2022.
Earlier this fall, the IRS sent reminder notices to affected employers and self-employed individuals. The agency noted, however, that those affected are still required to make the payment on time, even if they did not receive a notice.
How to repay the deferred taxes
Employers and individuals have several options for making this payment. Deferral payments can made through the Electronic Federal Tax Payment System (EFTPS), Direct Pay, by debit card, credit card or digital wallet, or with a check or money order. No matter which payment option is chosen, it must be made separately from other tax payments and deposits. This will ensure that it is credited properly and will help avoid follow-up bills or notices.
EFTPS
Employers and individuals can make the deferral payments through enrollment in the Electronic Federal Tax Payment System, a free service available from the Treasury Department. On the Tax Type Selection screen, choose Deferred Social Security Tax and then change the date to the applicable tax period (the calendar quarter in 2020 for which tax was deferred). Visit EFTPS.gov or call 800-555-4477 or 800-733-4829 for details.
Direct Pay
Alternatively, self-employed individual taxpayers can choose Direct Pay to pay directly from a checking or savings account. This service is available free only on Direct Pay With Bank Account. Select the “Balance Due” reason for payment and apply the payment to the 2020 tax year where the payment was deferred. Direct Pay is not available to pay employment taxes.
Debit card, credit card or digital wallet
If paying with a credit card, debit card or digital wallet, select “installment agreement.” Apply the payment to the 2020 tax year where the payment was deferred. Note that the IRS does not charge a fee for this service, but the authorized third-party payment processors do. Visit IRS.gov/payments for details.
Check or money order
Make any check or money order payable to United States Treasury, not IRS. For more information on where to mail payments see Instructions for Form 941.
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