This article is about a government program related to COVID-19 that has ended. This article is still available to help employers that used Wave during that time find and understand their payroll records.
If you chose to defer employer or employee Social Security in 2020, the IRS requires you to repay those deferred taxes in full by December 31, 2022.
In this article
- What employers need to do
- When repayment is due
- How to calculate your employer-deferred Social Security repayment
- How to repay deferred taxes
- Frequently asked questions
What employers need to do
If you deferred employer and employee Social Security taxes in 2020, you must repay deferred Social Security. The first installment amount was due December 31, 2021, and was half the employer's share of Social Security taxes you could have deferred (which includes any amount of the employee's share of Social Security taxes deferred).
The final installment is due December 31, 2022, and is the remaining unpaid deferred taxes. Repayment must be made outside of Wave, directly to the IRS.
Learn more in the IRS Guide: What employers need to know about repayment of deferred payroll taxes and Understanding Your CP256V Notice.
When repayment is due
December 31, 2022: The remaining unpaid deferred Social Security taxes from 2020.
Since the due date for this payment falls on a Saturday, and Monday January 2nd is a legal holiday, payments will be considered timely if deposited on the next business day, January 3, 2023. Learn more about tax deposit due dates.
How to calculate your employer-deferred Social Security repayment
To calculate your employer-deferred Social Security repayment, begin by calculating the total amount of employer Social Security tax deferred in 2020, less any payments you have made to the IRS outside of Wave.
There are two ways to review the total amount of employer Social Security you deferred in Wave. You can pick either method to find the total employer-deferred Social Security from 2020.
Review the COVID-19 Hub
- Navigate to Payroll > COVID-19.
- Under Tax Deferrals the total amount deferred appears under Social Security tax deferral (CARES Act).
Remember that the first 50% of the total amount deferred was due December 31, 2021. The remainder is due December 31, 2022.
Generate a Payroll Wage and Tax report for tax year 2020
- Navigate to Reports > Payroll Wage and Tax Report.
- Set the Period to Other with a Start date 01/01/2020 and End date 12/31/2020.
- Click Generate Report.
- The total amount of employer Social Security deferred will appear in the Tax Liability column to the right of Social Security Tax Deferral (Employer Deferral). Because your tax deferral reduced the liability due in tax year 2020, it appears in the 2020 Wage and Tax report as a negative number.
Remember that the first 50% of the total amount deferred was due December 31, 2021. The remainder is due December 31, 2022.
Employers who deferred Social Security with a different payroll provider before joining Wave should review their 2020 Forms 941 from quarters 2, 3 and 4 (April through December), their IRS deferral notices, and consider deposits already made to determine the total amount of social security tax still owing.
How to repay deferred taxes
Repayments must be made directly to the IRS.
Deferral payments can be made through the Electronic Federal Tax Payment System (EFTPS). You must make these payments separate from other tax payments to ensure they're applied to the deferred payroll tax balance. The IRS system will not recognize the payment if it's with other tax payments or sent as a deposit.
IRS reminder notices may not reflect amounts employers have already repaid. This may be due to delays in updating IRS records, or because IRS computations are based on half the amount an employer could have deferred, and the employer paid some amount in 2020 that they could have deferred. If an employer believes they owe more than the amount listed in the notices, they may choose to pay the higher amount to avoid penalties.
Wave cannot schedule repayments on behalf of employers.
EFTPS Tips
- Make sure to follow the special instructions provided by the IRS when depositing repayment.
- Don’t include your repayment in the same deposit as 2022 taxes.
- Consult the IRS directly at EFTPS.gov, or call 800-555-4477 or 800-733-4829 for details.
Not sure where to start?
Learn how to enroll in the Electronic Federal Tax Payment System (EFTPS)
Frequently Asked Questions
For answers to questions about repaying deferred Social Secuirty tax, consult this IRS resource: What employers need to know about repayment of deferred payroll taxes.