Repay deferred taxes from 2020

If your company deferred taxes through Gusto during 2020:

1. Make sure you're familiar with all the information and resources we provide below. 
2. Learn more about the agency notice you received and how to repay the taxes here—FAQs included. 
3. Repay the amounts to the IRS directly using the EFTPS—you can learn more about the EFTPS in this article by scrolling to the applicable dropdown.
   • We've recorded what amount was deferred, but if you make payments, we're unable to update the tax amount in Gusto with the new totals.

Deferred company taxes and how to repay them

What is the due date for repayment? 

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 therefore avoid a failure to deposit penalty:

• December 31, 2021: 50% of the eligible deferred amount
• December 31, 2022 (recognized on the Jan 2, 2023): the remaining amount

If an employer pays any amount before the applicable dates, however, that amount is first applied to reduce the employer's liability for the amount due on December 31, 2021, then to the amount due on December 31, 2022.

How to repay deferred taxes

For the portion of deferred taxes that were required to be repaid in 2021, the IRS sent reminder notices to companies in October of 2021. Employers who have yet to repay the full amount of deferred taxes owed will get additional reminder notices from the IRS beginning September 2022.

• Do not send these notices to Gusto—we will not be making the tax payment for deferred taxes on your behalf.

To repay the taxes:

1. Follow the instructions on the notice, or check out this additional agency resource.
   • The deferred taxes were either returned to the company when you made the selection to defer your taxes in 2020, or they were never collected by Gusto.
   • If you need help signing in to your EFTPS account, click the EFTPS—general info and repaying deferred taxes resources dropdown in this article to learn more.
2. Once you've signed in to your EFTPS portal, select “Deferral payment” and change the date to the applicable tax period for the payment—the IRS won't recognize the payment if it is paid with other tax payments or sent as a deposit.
   • If you're an employer that currently files Form 941: Select Form 941, the calendar quarter in 2020 to which your payment relates, and payment due on the IRS notice.
   • If you're an employer that files annual returns, like Form 943, 944, or CT-1: Select the return and 2020 tax year to make a payment.

For more information, visit EFTPS.gov, or call (800) 555-4477 or (800) 733-4829 (TDD).

Notice due date explanation

To determine the amount of tax due for the period, each return period is treated separately. This means 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.

Can I check how much was deferred in 2020?

Review your deferred totals by following these steps:

1. Sign in to your admin profile in Gusto.
2. Click the Reports section in the left-menu.
3. Search the Reports library for Tax Deferrals or scroll to the title under "All reports."
   • Important: the amounts listed in these reports may not exactly match what the IRS shows as due and payable. If the amount on the IRS notice does not match the amount on the Gusto report, it's important that you pay the full amount on the IRS notice. Failure to do so may result in penalties and interest.

You can also review how much was deferred in 2020 by downloading form 941 in Gusto:

1. Sign in to your admin profile in Gusto.
2. Head to the Taxes & compliance section and select Tax documents.
3. Under the “Federal” tab, find the applicable quarter's 941.
4. From the “Actions” column, click View.
5. Check the amount on Line 13b.

Can I repay before the due date? 

You can—employers can pay the amount they owe electronically using EFTPS (preferred method), by credit or debit card, or by a check or money order. 

• These payments must be separate from other tax payments to make sure they're applied to the deferred payroll tax balance—the IRS won't recognize the payment if it is combined with other IRS payments.

The EFTPS system has a new option for deferral payments—use the guidance below and the IRS instructions to repay the deferred taxes.

Within the EFTPS portal, select "Deferral payment" and then change the date to the applicable tax period for the payment:

• If you're an employer that currently files Form 941: select Form 941, the calendar quarter in 2020 to which your payment relates, and payment due on the IRS notice.
• If you're an employer that files annual returns, like Form 943, 944, or CT-1: select the return and 2020 tax year to make a payment.

For more information, visit EFTPS.gov, or call (800) 555-4477 or (800) 733-4829 (TDD).

Deferred employee taxes

Gusto did not process deferred taxes for employees in 2020. It is the employer's responsibility to repay deferred tax amounts back to the IRS once the deferment period ends, even if they haven’t collected the taxes from their employees. 

When is the due date for this payment? 

The due date for Applicable Tax repayment was extended from April 30, 2021, to December 31, 2021. Any associated interest, penalties, and additions to tax for late payment (with respect to any unpaid Applicable Taxes) will begin to accrue on January 1, 2022.

Still need help?

For more information, visit the IRS website which includes Frequently Asked Questions for these government programs. 

For more information about EFTPS, visit the EFTPS dropdown in this article.