The CARES Act offered eligible small businesses the opportunity to defer employer-paid Social Security taxes from March 27, 2020 until December 31, 2020.
How did it work?
If you chose to opt into the Social Security tax deferral program, Justworks stopped collecting the employer portion of your Social Security taxes. On your following invoices, you will have seen a charge and a credit for the employer portion of your Social Security taxes.
Your business is required to pay back the deferred taxes in two installments, 50% by December 31, 2021 and the remaining 50% by December 31, 2022. While we’re still waiting on more information from the government about the precise mechanics of how these repayments will be processed, the IRS released COVID Tax Tip 2021-99 setting the expectation that clients of PEOs like Justworks will work with their provider on repayment of their deferred taxes to facilitate a smoother reconciliation of your obligation. As soon as they release more guidance, we’ll let you know. Ultimately, your company, and not Justworks, will be responsible for any amounts owed back to the IRS.
- I already repaid my deferral amount, please make sure Justworks does not debit my account. Is there any information you need from me to show proof of payment?
- The IRS has not yet provided guidance on what information we need to collect in order to substantiate repayment. We will need to ensure that we can reconcile the amount you repaid with the amount reported for your company on Justworks’ tax returns. Once we have clarification, we will contact you with further instructions. Rest assured, we will not debit you until we have that additional information.
- This is a lot of money to debit as a lump sum. Will Justworks support payment installments?
- We are still working on the mechanics of repayment and will continue to send you updates as more information becomes available. Neither the CARES Act, nor any subsequent guidance from the IRS, authorized repayment of the amounts due on December 31, 2021, in installments after that date. Of course, our goal as your PEO is to make repayment as seamless as possible for our customers. At the same time, we need to ensure that we are able to remit and fully reconcile the amount you repay with Justworks with tax return records to help your company avoid costly errors and penalties later.
- The numbers provided by Justworks don’t match our books. How can this be reconciled?
- The total deferral amount is visible in your Justworks account in the Covid-19 relief page. We can also provide you with a more detailed view if you connect with our team. Please contact us at firstname.lastname@example.org.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.