The critical Social Security tax filing deadline is just days away — and missing it could cost Americans thousands of dollars in penalties.
The Internal Revenue Service is reminding self-employed Americans and homeowners to delay 2020 Social Security half of the tax must be paid by January 3.
The other half of the delay is due on January 3, 2023.
It occurs when employers and self-employed individuals may choose to defer paying their employer’s share of their qualifying Social Security tax liability as part of a Covid relief provided in 2020.
This is useful if you are experiencing financial hardship, but it is important to note that the relief is only temporary and taxes must be underpaid.
Each month, your boss typically takes 6.2% of your salary and will contribute 6.2% per employee to Social Security, for a total of 12.4%.
This personal income tax help fund Social Security, which helps tens of millions of elderly and disabled Americans.
Most of those affected received a reminder payment notice from the IRS.
However, the IRS notes that those affected are still required to pay on time, even if they don’t receive a bill.
According to the accounting firm Cherry Bekaert, if you miss the deadline, the penalty is usually 10% of the full amount late.
It then increases to 15% if the IRS issues a notice claiming payment and one is not made within 10 days.
For example, if an employer or self-employed individual has deferred a $10,000 tax payment, you could be subject to an initial $1,000 penalty.
How to pay deferred tax
There are several ways to make deferred payments, including through the Electronic Federal Tax Payment System (EFTPS) or by credit or debit card, money order, or by check.
To ensure these payments are properly credited, it is important that they are made separate from other tax payments, according to the IRS.
EFTPS has an option for deferred payments.
On the Tax Selection screen, you can choose to defer Social Security taxes and then change the date to the applicable tax period.
This is usually the calendar quarter in 2020 for which the tax has been deferred.
You can also visit EFTPS.gov, or call 800-555-4477 or 800-733-4829 for details.
Individual taxpayers can also use Direct Pay, which is only available on IRS.gov.
Select the “balance due” reason for the payment. If paying by debit or credit card, select “installment agreement”.
Then simply apply the payment to the tax year 2020 for which the payment is deferred.
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https://www.the-sun.com/money/4353946/social-security-tax-deadline-penalty/ Important Social Security tax payment deadlines after DAYS