Three Key Details for Deferred Social Security Tax Repayment

Employers that deferred the Social Security portion of payroll taxes in 2020 should be aware that 50% of the amount is due for 2021 and the last day to submit payments for 2021 is January 3, 2022, and the remaining 50% is due in 2022. It is important to note that the balance due is calculated on the total amount possible to defer in 2020, not the actual deferred amount. 

Following the specific IRS guidelines for making these payments will help prevent delays and unnecessary penalties.  The EFTPS website and telephone payment system both have a Deferred Social Security Tax option that must be selected for the type of 941 payment.  Additionally, a separate payment must be made for each quarter.

Lastly, if any portion of the deferred tax payment is not made in a timely manner, the total deferred tax will be assessed penalties.  This penalty will be assessed from the original due date.  Internal Revenue Code §6656 indicates these penalties will be 10% of the underpayment when 15 days late, and will increase to 15% if not paid within 10 days of receiving the first delinquency notice.

Contributed By: Kristie Small, CPA, MBA | DWD CPAs & Advisors