The Clock Is Ticking Towards The Deadline For Withholding Deferred Social Security Taxes

Employers could defer certain employees’ Social Security taxes from September 1, 2020, to December 31, 2020. This applied to employees paid less than $4,000 every two weeks, or an equivalent amount for other pay periods, with each pay period considered separately. The employee portion of Social Security taxes are calculated at 6.2% of employees’ wages.

The period during which employers must withhold and pay applicable taxes was postponed from April 30, 2021, to December 31, 2021. As a result, any associated interest, penalties, and additions to tax for late payment of any applicable unpaid taxes will begin to accrue on January 1, 2022, rather than on May 1, 2021. 

Payments made by January 3, 2022, will be considered timely because December 31, 2021, is a legal holiday. Any unpaid balances, penalties, interest, and additions to tax start on January 1, 2022. The IRS warned employees that they could see their deferred taxes being collected immediately and check with their employer’s payroll contact on their collection schedule.