The Internal Revenue Service released information on how employees now have until the end of the year to repay any payroll taxes they deferred from last year.
Former President Trump issued a presidential memorandum last August allowing Social Security taxes to be deferred for the rest of 2020, but under the order they had to be repaid by April 30, 2021. The coronavirus relief package that Congress passed last month extended the repayment period until the end of this year.
Relatively few companies actually implemented the payroll deferral for their employees because there was no guarantee that the deferred payroll taxes would ultimately be forgiven by Congress. However, federal employees and military service members were still required to accept the payroll tax deferral, meaning those taxpayers will be facing smaller paychecks later this year.
Anant Jhingran is chief technology officer, Apigee, at Google Cloud. He was previously an engineer, VP and CTO for IBM's information management division. He has also been the director of computer science at the IBM Almaden Research Center and senior manager for e-commerce and data management at IBM's T. J. Watson Research Center.
Jerry Melnick is president and chief executive officer at SIOS Technology, where he is responsible for directing the overall corporate strategy and leading the company’s ongoing growth and expansion. Jerry has over 25 years of experience in the enterprise and high availability software markets, including as CTO at Marathon Technologies, along with executive positions at PPGx, Belmont Research and Digital Equipment Corporation. Jerry holds a Bachelor of Science degree from Beloit College with graduate work in computer rngineering and computer science at Boston University.
Michael Endler is head of editorial for Apigee at Google Cloud.
In Notice 2021-11, the IRS on Tuesday explained how employers who deferred payroll taxes on behalf of their employees can withhold and pay the deferred taxes throughout 2021 instead of just within the first four months of the year.
The deferral applied to employees who were paid less than $4,000 every two weeks, or an equivalent amount for other pay periods, with each pay period considered separately. The taxes, which are technically called Old Age, Survivors and Disability Insurance, or OASDI, are calculated at 6.2 percent of employees’ wages.
Notice 2021-11 makes changes to last year’s Notice 2020-65 to reflect the extended payment period. Payments made by Jan. 3, 2022, will be considered to be timely because Dec. 31, 2021, is a legal holiday. However, any penalties, interest and additions to tax will now start to apply on Jan. 1, 2022, for any unpaid balances
The IRS cautioned that employees could see their deferred taxes being collected immediately, so employees should check with their organization’s payroll point of contact on what their collection schedule will be.
