Payroll Deferment Under the CARES Act

April 7, 2020

Payroll tax delay

Delays payment of 50% of SOME of the 2020 Federal employer payroll taxes until 12/31/2021
The other 50% will be due 12/31/2022

  • It only applies to federal taxes incurred between March 27, 2020, and December 31, 2020, so that means most Q1 taxes are not eligible for deferment.
  • It only applies to the employer’s 6.2% Social Security Tax.
  • It does not apply to the taxes withheld from employees, such as federal Withholdings or Medicare taxes.
  • Applies to ½ of Self-employment taxes.
  • Employers who have debt forgiven under the Payroll Protection Program are not eligible for payroll tax deferral.
  • It does not apply to state taxes as this is part of the Federal CARES act only. There are currently no states that we are aware of who have passed a payroll tax delay at the state level.

Tax Tip:  if you can afford to pay all of the taxes at this time, I strongly urge you to do so.  Trying to pay all these taxes later can be daunting.

Many clients are asking us to hold off paying their payroll taxes this quarter.  

This can be a massive mistake as the penalties for failure to pay the portion that is not allowed in this deferral will be 10% to 25% of the taxes owed, creating an even greater burden.


Click here for more information on the CARES Act  or  click here for COVID legislation FAQs and Updates


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