Paying Deferred Employee Taxes
Last year, due to the economic difficulties that accompanied the coronavirus, many businesses were given the option to defer paying certain employee taxes until the end of 2021. To learn more about this extended filing period and how it could help you with your own employment-related taxes, please reach out to our experienced Florida tax & IRS attorneys today.
Employers are responsible for withholding a certain percentage from their employees’ paychecks and then remitting those amounts to the IRS to cover taxes. As a part of this responsibility, employers are also required to match the amounts being withheld. For instance, employers must pay a matching 6.2 percent for the employer portion of the Social Security tax every month. With the passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act, however, qualifying employers were given the option of waiting to deposit and pay their own portion of these taxes for a specific period of time. Options like these were intended to help ease the pressure on companies across the nation, especially small businesses, which have had trouble paying these taxes in a struggling economy.
At the end of August last year, certain employers were given the option of deferring paying specific employee Social Security taxes from September 1, 2020 until December 31, 2020 and then withholding and paying those deferred taxes in 2021.This option was available only to employees who paid less than $4,000 every two weeks, or an equivalent amount for separate pay periods. Under this change, Old Age, Survivors and Disability Insurance (OASDI) taxes, which are calculated at around 6 percent of employee wages, could be deferred, withheld, and paid ratably starting on January 1, 2021. Initially, the applicable due date for the withholding and payment of these taxes was April 30, 2021.
Although the original relief offered to employers was to terminate this spring, a recent change extended the deadline. Under this modification, the period of time during which employers can withhold and pay deferred taxes is now from January 1, 2021 to December 31, 2021. For this reason, any associated interest, penalties, or additional taxes for late or unpaid balances will only start to accrue on January 1, 2022, rather than on May 1st of this year. The only exception to this rule applies to payments that are made by January 3rd, which will not be considered late, as the last day of December is technically a legal holiday.
Set Up a Complimentary Consultation Today
Most of us were eager to see the last of 2020. Many taxpayers, however, are still facing financial difficulties as a result of the COVID-19 pandemic. For help addressing these tax-related problems, especially tax deferred payments, please reach out to dedicated tax & IRS law attorney Ronald Cutler, P.A. today. Initial consultations are offered free of charge, so don’t hesitate to call our office at 386-490-9949 or send us an online message to set up your appointment.