Due to the COVID-19 pandemic, many non-essential businesses have been shut down, resulting in an unprecedented economic downfall for many employers. In efforts to provide relief for employers, the government has passed the CARES Act, which will allow employers to save costs by deferring their Social Security payroll tax (6.2%) payments. This deferral period applies to employee wages accrued between March 27, 2020 and December 31, 2020. Once the deferral period has passed, the employer will be obligated to pay the “deferred amounts” to the U.S. Treasury in two installments. The first half of the deferred amount of payroll taxes will be due on December 31, 2021, while the remaining half will be due on December 31, 2022. The CARES Act also applies to all employers regardless of their sizes, including individuals who are self-employed. The only exception is employers who have already received Small Business Act loans that are forgiven under the Cares Act. These employers do not qualify for the payroll tax deferral.
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