By Larry Light
The pandemic has brought a bunch of aid and tax breaks for Americans.
The pandemic has brought a bunch of aid and tax breaks for Americans. To make sense of them, we consulted tax expert Bruce Bell, an attorney at the Chicago office of Schoenberg Finkel Beederman Bell Glazer.
Larry Light: Some small business owners believe that the new tax provisions, passed as economic relief during the pandemic, enable them to defer all of the payroll taxes incurred on the wages they pay to employees?
Bruce Bell: Not exactly. The deferral only applies to some of the payroll taxes that are paid on behalf of employees.
The Coronavirus Aid, Relief and Economic Securities Act, known as the CARES Act, extends the deadline for employers and self-employed individuals to pay a portion of the Social Security taxes that are imposed on earned income.
For employers, the extended due date applies to the employer’s share of Federal Insurance Contribution Act or FICA taxes on employee wages. For self-employed individuals, the extension applies to one-half of FICA taxes which are required to be paid on the earnings of a self-employed individual. The deferred payments can be paid over a two-year period, one-half of which must be paid by December 31, 2021 and the balance by December 31, 2022.
Light: Please describe who pays what.
Originally published on Forbes.com October 9, 2020