LGT's Profit Sense
The Coronavirus, Aid, Relief and Economic Security Act (CARES Act), passed in 2020 to help alleviate the economic distress experienced due to the pandemic, had two provisions related to the deferral of payroll taxes that need to start being addressed by the end of 2021.
For those employers and self-employed individuals that chose to defer some or all of the amount of social security taxes eligible for deferral during 2020, the amounts due are as follows:
- The portion that must be paid by December 31, 2021 is 50% of the total amount that was eligible for deferral; and
- the remaining 50% is to be paid by December 31, 2022.
You may repay the total amount before the dates above if you choose. Failure to make the required payment by either due date above will result in a penalty that, unless an exception applies, runs from the original due date and is applicable to the entire deferred amount.
While the preferred method of payment is the Electronic Federal Tax Payment System, employers and self-employed individuals can make the payments by credit card, debit card, check, or money order. Most importantly, the payment should be made separately from any other payment and make sure to properly identify the payment by noting the type of tax and the proper period to which it applies when submitting it to the IRS.
As with most things involving the pandemic related legislation over the past couple of years, you may have some questions related to the discussion above. Please set a time to meet with one of our professionals if you need help working through your specific payment situation.
