Social Security Tax Payments

The CARES Act Provision Allows Deferral of Social Security Tax Payments

April 14, 2020 - The IRS has recently come out with guidance regarding the ability to defer payment of the "employers portion" of social security tax under the CARES Act (The Act).

The Act allows employers, and self-employed individuals to defer social security tax payments that would normally be due and payable during the March 27, 2020 thru December 31, 2020 time period. There are no special elections required to defer these tax payments.

The deferral only applies to the social security tax (not the Medicare portion) 6.2% of the first $137,700 of wages. Self-employed individuals will be able to defer 50% of the social security tax on net self-employment income (effectively reducing quarterly estimated tax payments).

The deferred tax amounts are to be repaid equally over a 2-year period with payments due by December 31, 2021 (50% of the deferred tax) and the remaining (50%) will be due by December 31, 2022.

All employers are considered a "qualified employer" except any employer that has received a loan under the Paycheck Protection Program will be restricted in the ability to defer their payroll tax payments covered by the loan.

The tax deferment will allow employers and self-employed individuals the ability to hold onto some much needed cash during these unprecedented times. The tax professionals at Dermody, Burke and Brown CPAs are here to answer your questions or assist you in navigating through the various programs that are available.


The information reflected in this article was current at the time of publication.  This article will not be modified or updated for any subsequent tax law changes, if any.