The Notice designates employers as taxpayers affected by the COVID-19 emergency and postpones the deadline for withholding and payment of certain employee Social Security tax (or the corresponding amount of RRTA) until the period from Januto April 30, 2021. The $4,000 biweekly cap is determined without regard to the amount of wages or compensation paid to the employee for other pay periods. See our recap of IRS attorney responses to questions raised about this deferral program in EY Tax Alert 2020-2204 and our executive summary in EY Tax Alert 2020-2182.Īs previously reported ( EY Tax Alert 2020-2163), the Notice exercises the authority under IRC Section 7508A to allow employers to defer, without penalties, interest or additional tax, the withholding, deposit and payment of the employee's share of Social Security tax for the period from September 1, 2020, through December 31, 2020, for employees generally earning less than $4,000 in gross wages in a biweekly pay period (Applicable Wages), or the equivalent amount if the pay period is not biweekly. In consideration that the employee Social Security tax deferral applies for the period September 1, 2020, and through December 31, 2020, these revised reporting instructions apply only to the Form 941 for the 2020 third and fourth quarters. The Form 941 has also been revised to reflect that employee Social Security tax deferrals are reported on lines 13b and 24. On October 1, 2020, the IRS released final Form 941 instructions that include guidelines to figure and report the employee Social Security tax deferral pursuant to the President's Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster and IRS Notice 2020-65 (the Notice). IRS releases Form 941 instructions for employee deferral of Social Security tax allowed as part of a COVID-19 relief measure
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