How to Repay Deferred Social Security Tax

How to Repay Deferred Social Security Tax

Authored by the IRS, July 6, 2021

How Self-Employed Individuals and Household Employers Repay Deferred Social Security Tax

The Coronavirus Aid, Relief, and Economic Security Act allowed self-employed individuals and household employers to defer the payment of certain Social Security taxes on their Form 1040 for tax year 2020 over the next two years. Half of the deferred Social Security tax is due by December 31, 2021, and the remainder is due by December 31, 2022.

How individuals can repay the deferred taxes

Individuals can pay the deferred amount any time on or before the due date. They:

  • Can make payments through the Electronic Federal Tax Payment System or by credit or debit card, money order or with a check.
  • Should be separate payments from other tax payments to ensure they are applied to the deferred tax balance on the tax year 2020 Form 1040 since IRS systems won’t recognize the payment for deferred tax if it is with other tax payments or paid with the current Form 1040.
  • Should designate the payment as “deferred Social Security tax.”

Individuals making deferred Social Security tax payments in EFTPS should select 1040 US Individual Income Tax Returns and deferred Social Security tax for the type of payment. They must apply the payment to the 2020 tax year where they deferred the payment. Taxpayers can visit EFTPS.gov for details.

Those using Direct Pay should select the reason for payment “balance due.” If they are using the Card Program to pay with a debit or credit card, they should select “installment agreement.” They should apply the payment to the 2020 tax year where the payment was deferred.

What individuals should do if they are unable to pay in full by the installment due date

Individuals who are unable to pay the full deferred tax amount should pay whatever they are able to pay by the installment due dates to limit penalty and interest charges.

If the installment amount is not paid in full, IRS will send the taxpayer a balance due notice. Taxpayers should follow instructions on the notice to make a payment or apply for a payment plan. They can also visit the Paying Your Taxes page on IRS.gov for additional information about ways they can pay, what to do when they can’t pay, and viewing their tax account.

View full article on IRS Website

Notice CP256V

The IRS will be sending out notices that deferred payroll taxes from 2020 are due December 31, 2021. Get details about Notice CP256V here.

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