Repaying Deferred Self-Employment and Household Employment Tax

The IRS has sent reminder notices for the upcoming due date for payments of deferred self-employment from 2020 tax returns. Payments of the deferred tax are due half by the end of 2021 and the remaining half by the end of 2022.

Background:  The CARES Act created a provision allowing employers, including household employers and self-employed individuals, the ability to defer the payment of 2020 Social Security taxes over two years. The IRS has outlined how the self-employed and household employers should repay the deferred amounts.

Repayments of amounts deferred must be made by the end of 2021 (January 3, 2022 to be exact since December 31, 2021 is a holiday).

Amounts can be repaid anytime up through the due date by:

• Electronic Federal Tax Payment System (EFTPS); selecting “1040 US Individual Income Tax Returns”, then “deferred Social Security tax” for the type of payment. See EFTPS.gov for more details.
• Online at https://www.irs.gov/payments separately from any other tax payment via credit or debit card by designating “deferred Social Security tax” Those who use the “Direct Pay” option should select the reason for payment as “balance due” and will be required to provide information on a previously filed return to verify their identity.
• Mailing a Money order or by check by designating “deferred Social Security tax” with the voucher provided by the IRS with reminder notices or as a separate payment if a voucher was not received. No separate form or voucher is required to make payments

Reach out to our team at MWB on any questions you may have on repaying the deferred self-employment tax or any other tax issues.