Are you an employer that allowed your workers to defer their payroll taxes in 2020 into the year 2021? Or are you an employee whose employer allowed you to defer these amounts and you’re wondering now when those taxes need to be withheld and paid?
The Cares Act of 2020 allowed employers to offer this benefit to employees giving them more cash in their paychecks that would help them through this difficult time the pandemic had brought about. But that deferral period ended as of December, 2020, and as of 2021, those taxes that had been deferred are now due.
Employers are responsible for withholding that amount from their employees’ paychecks on top of the regular amount of tax that is currently due with that pay period. These taxes need to be paid separately from the regular payroll tax deposits. However, if you include the total amount as a tax deposit, it will be assumed that these amounts are for the current tax period rather than the deferral.
So, you’ll need to separate out the amounts that you withheld from employees and pay that back to the IRS through the EFTPS program. More details will be released from the IRS letting you know when this capability exists through EFTPS.
But the main thing to know is that it’s time to start withholding those amounts that had been deferred and adding that to your employees’ paychecks so that you can recoup the cost that’s due. The bad news though, is if your employee is now gone from your company, you as the employer are responsible for paying those payroll taxes back.
If you have questions regarding the deferral and how to handle this, you can give us a call at (310) 534-5577 or email us at [email protected]. Of course, more information can also be found on the IRS website irs.gov.
