The Internal Revenue Service is sending notices to taxpayers who deferred their Social Security taxes last year, warning them that half the taxes will be due by the end of this year.
In an email to payroll professionals Friday, the IRS said that it’s sending informational-only CP256V Notices to self-employed individuals and household employers who chose to defer paying some Social Security taxes under the CARES Act in October and November. The notice reminds them the first installment of deferred Social Security taxes will be due by the end of December and the remainder by the end of next year.
The payroll tax deferral aided taxpayers who found they desperately needed funds to pay their regular expenses during the first year of the pandemic. However, many tax professionals advised their clients that the taxes would eventually come due. The payroll tax relief in the CARES Act for employers differed from the payroll tax holiday that former President Trump issued by executive order in August of last year for employees, which required repayment of the deferred taxes by the end of April 2021. Federal government employees and members of the military were automatically subject to that payroll tax holiday, but most taxpayers and companies avoided opting for it last year, knowing the taxes would eventually have to be paid.
“The CARES Act allowed these types of taxpayers to defer the payment of certain Social Security taxes on their Form 1040 for tax year 2020 over the next two years,” said the IRS. “Half of the deferred Social Security tax is due by December 31, 2021, and the remainder is due by December 31, 2022.”
The IRS said it would continue to issue these courtesy notices before each installment is due, but no response is needed.
More information can be found here: