Remember that flurry of CARES act tax credits, stimulus, and tax deferrals? There was lots of free money in the CARES act, but one component needs to be repaid this December: the social security tax deferral.
When Covid-19 first began, it was easy to check a box in payroll systems to automatically defer social security tax payments. That means your business incurred social security tax expense, but did not pay it in 2020. This accumulated a liability is due to be repaid in half by 12/31/2021. Here’s the catch: your payroll company will not do it automatically for you. That means you need to login to the IRS EFTPS website to schedule a repayment.
Failure to repay 50% of your tax deferral by 12/31/21 will result in penalties and interest – an unnecessary expense for any business. You can login to EFTPS now and schedule your payment for the future – so go do it now, before you forget! You’ll need to schedule 3 payments – one for each quarter. Be sure to select form 941 and the relevant quarter (Q2, Q3, and Q4) so the IRS doesn’t “misplace” your payment.
The other 50% of the tax deferral will be due on 12/31/22 (next year) so take a minute and schedule that payment too!
