Self Employment Tax Deferral on 2020 Return in TurboTax

It's too soon to know what TurboTax 2021 will do with the deferred self-employment tax. For that matter, we don't yet know whether the IRS forms for 2021 will have any place to carry over or reconcile the deferred self-employment tax. I would assume that they will handle it appropriately, and not treat it as tax due on the 2021 tax return. It might not appear on the 2021 tax return at all.

I certainly would not enter the payment as an estimated tax payment for 2021, because that's not what it is. Entering it as an estimated tax payment would make the tax calculation on the 2021 tax return incorrect, resulting in an IRS notice with an additional payment due, plus penalties and interest. Wait for guidance when the 2021 forms and software are available.

Bob Sandler

Thanks Bob.

It turns out that the IRS has recently posted DRAFTS of Form

1040, Schedules 1, 2, 3, and Schedule SE for 2021. I don't see anything about the deferred self-employment tax on any of those draft forms. Of course these are just drafts, but it seems likely that the deferred tax is not going to be shown anywhere on the 2021 tax return. That makes sense, since the payment is due by December 31, 2021, and you wouldn't be filing your 2021 tax return until after that. So it looks like payment of the deferred tax will be handled outside of the tax return.

Bob Sandler

You won't find it on the 1040 because the employer is responsible for withholding the amount from the employee's 2021 wages and remitting it to the IRS. The employer is also responsible for remitting the deferred taxes for employees who are no longer employed.

See

We're talking about someone who is self-employed, not an employee. The question is about a self-employed person who, on his 2020 tax return, deferred the Social Security portion of the self-employment tax. The deferred amount is on Schedule 3 line 12e of his 2020 tax return. The self-employed person is responsible for paying the deferred tax himself. There is no employer involved, no wages, and no withholding.

Bob Sandler

And here is the equivalent IRS Newsroom article explaining how a SELF-employed person pays the deferred tax.

Basically these steps:

"Individuals can pay the deferred amount any time on or before the due date. They:

1. Can make payments through the Electronic Federal Tax Payment System or by credit or debit card, money order or with a check. 2. Should be separate payments from other tax payments to ensure they are applied to the deferred tax balance on the tax year 2020 Form

1040 since IRS systems won't recognize the payment for deferred tax if it is with other tax payments or paid with the current Form 1040. 3. Should designate the payment as "deferred Social Security tax." "

Thanks a lot Alan.

News!

The IRS PMTA Argues That Taxpayers Who Make Minor Errors in Depositing Deferred FICA Under CARES Act Timely Owe Penalty on Entire Amount Deferred:

If a TP wants to send their payment by check, do we know WHERE to send this payment to? The IRS says to NOT send it to where we send our 1040-ES.