Employers and self-employed individuals have two weeks to pay up on Social Security tax payments if they deferred them earlier in the pandemic, according to an Internal Revenue Service reminder.
The December 31 deadline to fully pay the deferred taxes is connected to a time in the pandemic’s earliest months, when federal lawmakers were looking for various tax tactics to free up business and household cash.
The payroll taxes applied to wages include 12.4% that go towards Social Security, with the employer paying 6.2% and the employee paying 6.2%. Self-employed taxpayers pay both, and if a gig worker is working as an independent contractor, the IRS would view them in the self-employed category, along with sole proprietors and partnership members.
Under the CARES Act of 2020 — the sweeping legislation authorizing the first round of stimulus checks, enhanced jobless benefits and more — lawmakers said employers could hold off on paying their 6.2% from March 2020 through the end of the year. Self-employed workers could also hold off on paying 6.2% of the tax, the IRS said.
The first half of the deferred payments needed to be paid by the end of last year, and the IRS needs the second half of the deferred payments by the end of this year. As in, approximately two weeks from Friday.
The IRS has sent out reminders about the deadline for the second installment to businesses and taxpayers who deferred the payments, the agency noted.
It’s just one reminder of the various end-of-year tax planning measures that businesses and households may need to consider. As the stock market continues to lurch downward, another tax planning measure could be gathering capital losses to offset gains in the tactic of tax loss harvesting.