The CARES Act allows employers to delay the payment of the employer’s share of Social Security payroll tax, which is 6.2% of wages up to the annual wage base ($137,700 in 2020). The deferral also applies to 50% of the equivalent taxes incurred by self-employed persons. This only applies to taxes incurred from March 27, 2020, through December 31, 2020. Employers who opt to delay payment would need to deposit half of that delayed amount by December 31, 2021, and the other half by December 31, 2022. This payment deferral does not apply to the employee’s share of Social Security tax, the employee or employer’s share of Medicare tax, or to the Additional Medicare tax imposed on employees with Medicare wages in excess of $200K.
In addition, filing deadlines for reporting the employee and employer portions of Social Security and Medicare taxes have not been delayed by the Act.
Please note, an employer is ineligible for this payment deferral if it acquires a loan through the Paycheck Protection Program, for which all or part of the loan was or will be forgiven.