Deferral for certain Schedule H and SE filers

[sffdib]

For 2020 Schedule 3, Part II, line 12 (e), Deferral for certain schedule H and SE filers. When I read the word "deferral", I cannot help but to think it needs to be paid back at some point. The instructions that I read describes it but nothing on pay back. Does this have to be paid back next year? 

[Just-Lisa-Now-]

yes, its deferred to 12/31/21 and 12/31/22.
This link walks through the explanation fairly clearly in case the CEs you took for 2020 were too rushed and you didnt get all the details during those classes (they packed LOTS of stuff into them!)
https://www.thetaxinstitute.com/insights/tax-in-the-news/setax-deferral-cares-qotw/

[qbteachmt]

It provides parity to the Self-Employed, to match what employer's are allowed:

"The deferred deposits of the employer's share of Social Security tax must be deposited by the following dates (referred to as the "applicable dates") to be treated as timely (and avoid a failure to deposit penalty):

• On December 31, 2021, 50 percent of the eligible deferred amount; and
• On December 31, 2022, the remaining amount."

From: https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-20...

[sffdib]

Thanks Lisa. I understood the deferred SS for employees. I missed the one for Self-Employed. How do I stop ProSeries from showing it as an error when clients do not want to defer social security to Dec 2022? Sch SE-T is always showing as an error unless I allocate net profit to March 27, 2020 to December 31, 2020.

[Just-Lisa-Now-]

I just put a zero in that box.

[sffdib]

Thanks Lisa. You're my guardian angel.

[sffdib]

FYI, self-employed client had an anticipated refund $XX, and deferred amount on schedule 3, Part II line 12e, the client received a refund less the deferred amount. 

[Just-Lisa-Now-]

thats because if you had a refund then you already paid in the SE taxes, and you werent allowed to defer taxes that had already been previously paid in....so in other words, refund=no deferment

[qbteachmt]

"had an anticipated refund $XX, and deferred amount on schedule 3, Part II line 12e, the client received a refund less the deferred amount."

Did you use the Link and read what the IRS tells you there?

To summarize it: the deferral is not a Refundable Credit. When/If they already paid In, they don't get that part Back.

"A taxpayer who has deferred his or her payment of the employer's share of Social Security tax or 50% of the Social Security tax on net earnings from self-employment under section 2302 of the CARES Act is not eligible for a refund due to the deferral because the deferral amount is a deferral of payment, not a deferral of liability. Therefore, the deferral itself does not result in an overpayment of taxes reported on Form 1040."

[sffdib]

Thank you.