Section 2302 of the CARES Act allowed self-employed individuals and household employers to defer the payment of certain Social Security taxes on their Form 1040 for tax year 2020 over the next two years. Half of the deferred Social Security tax is due by December 31, 2021, and the remainder is due by December 31, 2022.
How to make payments on deferred tax
Taxpayers can pay the deferred amount any time on or before the due date. They can:
- Make payments through the Electronic Federal Tax Payment System (EFTPS) or by credit or debit card, money order or with a check.
- They should separate deferred Social Security Tax payments from other tax payments to ensure they are applied to the deferred tax balance on the tax year 2020 Form 1040. The IRS systems won't recognize the payment for deferred tax if it is with other tax payments or paid with the current Form 1040.
- They should designate the payment as "deferred Social Security tax".
- Individuals making deferred Social Security tax payments in EFTPS should select "1040 US Individual Income Tax Returns," then "deferred Social Security tax" for the type of payment. They must apply the payment to the 2020 tax year where they deferred the payment. Taxpayers can visit EFTPS.gov for details.
- To use EFTPS, the taxpayer must enroll, setting up login credentials. They may also authorize their tax preparers to make the payments on EFTPS.
Note: While the EFTPS system specifies how taxpayers are to indicate that their payment is for these deferred taxes, IRS Direct Pay does not provide any similar instructions for payments directly from a taxpayer's bank account.
The IRS has not yet created any form or voucher to be sent along with a check or money order to pay the deferred taxes. Taxpayers should write "deferred Social Security tax" on the check or money order itself.
Taxpayers who are unable to make payments
Individuals who are unable to pay the full deferred amount should pay whatever they can by the installment due dates to limit penalty and interest charges.
If the installment amount is not paid in full by the due date, the IRS will send a balance due notice. Taxpayers should follow the instructions on the notice to make a payment or apply for a payment plan.
Taxpayers can also visit the Paying Your Taxes page at IRS.gov for additional information about ways to pay, what to do when they can’t pay, and viewing their tax account.