If your business elected to defer payment of certain 2020 social security (FICA) taxes under the CARES Act, time is quickly running out to begin repaying those taxes and avoid late fees and penalties.
Under the CARES Act, employers were allowed to defer paying their share of the 6.2% FICA payroll tax due between March 27, 2020 and December 31, 2020. Self-employed individuals were given the option to defer 2020 self-employment taxes incurred during the same period.
The Act required that half of the deferred taxes be paid by December 31, 2021. Since this date falls on a holiday, the actual deadline is Monday, January 3, 2022. The second half is due on December 31, 2022. Similarly, because this date falls on a weekend, the balance will be due on Monday, January 2, 2023.
For tax purposes, it may be prudent under certain methods of accounting to accelerate the payment of deferred FICA taxes to December 31 to claim the federal income tax deduction in the current tax year. Consult with your Grassi tax advisor to learn more.
These payments must be made separately from other tax payments and can be submitted through the Electronic Federal Tax Payment System. If you pay your FICA taxes through a payroll service, contact your provider to confirm the appropriate amount and date that the first repayment will be made.
For more information, please contact your Grassi advisor or Jeffrey Cohen, Tax Services Leader, at jcohen@grassiadvisors.com or 516.336.2475.
