Self-employment income deferred tax for Covid

[KathrynG3]

If there is a balance due, some self-employment tax may be deferred. However, it cannot be deferred for refund situations.

These details are captured as you are completing your self-employment income & expenses section.

If you are experiencing an error, please see: SE-T Max Deferral Line 18 error resolution and scroll down to see how to resolve the issue. There are several troubleshooting options described.

@lucylg

[lucylg]

TurboTax did not compute the eligible SE income for tax deferral.  Had to manually calculate amount.  Also did not provide vouchers for deferred tax.  Had to adapt 2020 payment voucher for additional tax due by end of  2011 and 2022.

[JamesG1]

IRS Form SE Self-Employment Tax  Part III allows self-employed individuals to compute a maximum amount of self-employment tax payments that can be deferred. 

Line 18 requires taxpayers choosing this deferral to make a reasonable computation of their self-employment income made from March 27, 2020, through December 31, 2020. 

IRS Form SE Instructions for Line 18 allow you to use any reasonable method to calculate the amount:

Use any reasonable method to divide the net profit or (loss) you reported on line 3 between (a) January 1, 2020, through March 26, 2020, and (b) March 27, 2020, through December 31, 2020. A reasonable method will accurately reflect the time when income was earned or accrued and deductible expenses were paid or incurred, depending on your method of accounting. In most cases, a proportional division of the amount reported on line 3 based upon the number of days in each period will be considered reasonable.

Self-employed taxpayers are allowed to pay 50% of Social Security tax on net earnings from self-employment for the period March 27, 2020 through December 31, 2020.  The deferred amount will be paid 50% in 2021, and the rest in 2022.

Payment may be made as you make other IRS Form 941 payments and the amount reported on IRS Form 941.

IRS Form 941 line 13b is titled Deferred amount of social security tax

IRS Form 941 Instructions state:  (page 14)

Paying the deferred amount of the employer share of social security tax. One-half of the employer share of social security tax is due by December 31, 2021, and the remainder is due by December 31, 2022.

[saltresources]

Turbo tax error in allowing deferral in tax refund situation. IRS disallowed deferral.

[Critter-3]

If you had a refund on the return that was taken to pay down the deferred amount requested.  This was a late change by the IRS that the TT program did not get until after you filed so the IRS made the correction.