Payroll Tax Deferral (CARES Sec 2302)
Deferral of Employer’s Social Security payroll payments – Employers and self-employed individuals can defer payment of the 6.2 percent employer share of Social Security taxes on 2020 employee wages.
Employers can defer payment of the employer portion of the Social security taxes (6.2%)
Self-employed can defer 50% of the self-employment taxes (6.2%)
Payroll tax deferral period is March 27, 2020 through December 31, 2020.
50% of deferred taxes are due by December 31, 2021
The remaining deferred taxes are due by December 31, 2022.
NOTE – If you receive loan forgiveness from the Paycheck Protection Program you are NOT eligible for the Payroll Tax Deferral once your loan forgiveness has been approved. However, you are eligible to defer payment of the employer’s share of Social Security tax through the date the lender issues a decision to forgive the loan.
Employers who have received a PPP loan may defer deposit and payment of the employer's share of Social Security tax that otherwise would be required to be made beginning on March 27, 2020, through the date the lender issues a decision to forgive the loan in accordance with paragraph (g) of section 1106 of the CARES Act, without incurring failure to deposit and failure to pay penalties.
Once an employer receives a decision from its lender that its PPP loan is forgiven, the employer is no longer eligible to defer deposit and payment of the employer's share of Social Security tax due after that date. However, the amount of the deposit and payment of the employer's share of Social Security tax that was deferred through the date that the PPP loan is forgiven continues to be deferred and will be due on the "applicable dates,"
Eric Glymph Financial Strategist / Founder EDGe Business Planning www.EDGeBusinessPlanning.com