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.
Mark Testa is the executive vice president of Regenexx for Business
This report analyzes how organizations are investing in direct care support and other benefits to alleviate the strain that affects caregiving employees.
Ravi has over 13 years of actuarial experience in the property and casualty insurance industry. Working in WTW's Insurance, Consulting, and Technology practice as an Associate Director, Ravi works with clients to provide industry leading insights and solutions. Throughout his tenure, he has worked as an effective leader and business partner on both the carrier and consulting side. Ravi's experience includes exposure to a vast array disciplines including analytics, ratemaking, reserving, capital management, and enterprise risk management.
In addition to his professional responsibilities, Ravi actively volunteers with the Casualty Actuarial Society.
Ravi holds a Bachelor of Science degree in Applied Mathematics from Kettering University. He is also a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries.
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.
