The employer’s share of Social Security tax (but not Medicare tax) can be delayed and paid over two years. Many business clients may not know that the deferral applies to:

• Self-employed individuals, and
• Recipients of Paycheck Protection Program (PPP) loans, but only until the date of PPP loan forgiveness.

Employer Payroll Tax Delay
Employers must withhold Social Security taxes on employee wages. Self-employed individuals are subject to self-employment tax. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, taxpayers are allowed to defer paying the 6.2% employer share of the Social Security tax (but not the 1.45% employer share of the Medicare tax) through the end of 2020. The tax is payable over the following two years with half paid by December 31, 2021, and the other half by December 31, 2022.

Deferral Period
The deferral applies to deposits and payments of the employer’s share of Social Security tax that would otherwise be required to be made during the period beginning on March 7, 2020, and ending December 31, 2020. (Section 2302 of the CARES Act calls this period the “payroll tax deferral period.”)

Applicable Dates
The payment for applicable employment taxes between March 27, 2020, and January 31, 2021, won’t be due before the applicable dates. The applicable dates are:

1. December 31, 2021, for 50% of employment and self-employment taxes
2. December 31, 2022, for the remaining 50% of those amounts.

An employer is treated as timely in making all deposits of applicable employment taxes required if all such deposits are made by the applicable date.