Deferral of Self Employment Taxes

Technical topics regarding tax preparation.
#1
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Just looking at my first client eligible for this. It seems there would be a voucher or something that we print with the tax return (similar to ES vouchers) for the deferred amounts, but I have seen nothing on it. Do we just tell the client the deferred amounts and when it is due? I know my software is not finalized yet, but am wondering how this is to work. Anyone know?
 

#2
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Are you talking about the deferral on Schedule SE? I don't know for sure but I feel like the 2021 and 2022 Schedules SE would be most likely used for the recoupment.
 

#3
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missingdonut wrote:Are you talking about the deferral on Schedule SE? I don't know for sure but I feel like the 2021 and 2022 Schedules SE would be most likely used for the recoupment.


Isn't half the deferral due Dec 2021 and the other half due Dec 2022?

Seems to me like they're probably going to implement a unique voucher later in the year and/or add this as an option through IRS DirectPay.
 

#4
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Yes, that is what I am talking about. Seems there should be something to give the taxpayer showing how much is due and the due dates.
 

#5
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Maybe software will issue something proprietary, but I haven't seen anything standard from the IRS.

I'm just going to clearly mention it in my closing email with amounts and dates if the client is affected, and also add affected clients to a list so that I can send out a targeted e-blast in early Dec of both years reminding that it's coming due and how to pay it. For the latter, I'm sure we'll have more guidance 10 months from now.
 

#6
JR1  
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I'm inclined to just fill in 0....all it does is push off the problem...
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Remembering our son, Ben Jan 22, 1992 to Aug 26, 2011.
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#7
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From the Q & A "Deferral of employment tax deposits and payments through December 31, 2020"

20. Will the IRS issue reminder notices to taxpayers reflecting the total amount of deferred taxes and the payment due dates? (added July 30, 2020)

The IRS intends to issue a reminder notice to employers before each applicable due date. Because each return period is treated separately for purposes of determining the amount of tax due for the period, Form 941 filers that deferred in all four quarters of 2020 may receive four reminder notices stating the deferred amounts that are due on the applicable dates in 2021 and 2022, even though the amounts for all four quarters will have the same due dates of December 31, 2021 and December 31, 2022.


Some of this Q & A applies to the deferral of SE tax also, so it seems to me to be implied that SE deferrals would get the reminders. Maybe they will include a special voucher at that time?

Seaside CPA wrote:Seems there should be something to give the taxpayer showing how much is due and the due dates.


I use Drake software, which produces a worksheet that shows this. Not quite the voucher many practitioners seem to be looking for, but at least it is something.
 

#8
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So, I have another question. New client, says he has an installment plan with IRS for last year's taxes. He is not going to be able to pay this year's either. Should he try to get everything owed set up on installment, or would you think he should defer all he can under this new deferral option until 12-31-21 and 12-31-22, and then get the remainder set up for installments.

I'm assuming if he elects the deferral option, he will still have to pay interest on the money, correct?
 

#9
JR1  
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I have the same client! lol In his case, I chose to defer and set up installment....he'll be able to catch up later this year. Interest rate is so low that I don't think I'd care much about that.
Go Blackhawks! Go Pack Go!
Remembering our son, Ben Jan 22, 1992 to Aug 26, 2011.
For FB'ers: https://www.facebook.com/groups/BenRoberts/
 

#10
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Seaside CPA wrote:I'm assuming if he elects the deferral option, he will still have to pay interest on the money, correct?


I am under the assumption that since, under the CARES act (including amendments), the deferred amounts are not due until the applicable due dates, no interest or penalty would apply until after such dates.
 

#11
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Here we are two months later still with questions. I also assume that there is no interest or penalty on the amounts deferred to December 2021 and December 2022. There is also no form that is produced with the 2020 tax return, like an estimated voucher, that we can give to the client telling them how to prepare their check and where to send it this coming December 31.

Just more follow up time on our part.
 

#12
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I just told my client that if he had not received anything from the IRS by the first of December regarding the payment coming due, to contact me so that I can try to determine how he is to pay it in. Hopefully we have guidance by then!
 

#13
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Taxalmancer wrote:I also assume that there is no interest or penalty on the amounts deferred to December 2021 and December 2022.


Correct.

I'm adding clients that do the deferral to a list. I'm sure information on how to pay will be forthcoming. I plan to send eblasts in both Decembers to those on my list reminding them to pay and explaining how to pay.

I suspect the IRS will add a category to IRS DirectPay and taxpayers will be able to conveniently pay through that.
 

#14
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Just scheduled a targeted reminder eblast on this first payment to go out soon.

Apparently the payment can be made using IRS direct pay. (pay like a return payment for the 2020 tax year according to IRS website) That's what I'm recommending my clients do. No idea if vouchers went out...

Might want to remind clients if a few of your clients took advantage of this... Hope they didn't spend too much on Black Friday and Cyber Monday. :?
 

#15
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Thanks for the reminder on this! Just emailed my client. I am curious if the clients received vouchers - I asked, we'll see what he says.
 

#16
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How self-employed individuals and household employers repay deferred Social Security tax:
https://www.irs.gov/newsroom/how-self-e ... curity-tax
 


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