Some additional information that might help ease your mind:
Electing the self-employment tax deferral amount for 2020 (Schedule 3, Additional Credits and Payments)
The third step is to for Etan to decide how much of the allowed amount he wishes to defer. The elected deferral is reported on Schedule 3, line 12e, and carries to line 31 of Form 1040. As explained above, the deferral serves to lower Etan’s balance due.
Note: Regardless of his decision, the full amount of self-employment tax is included in his total tax liability and one-half of the tax is claimed as an adjustment to income on Form 1040.
Repayment amounts in 2021 and 2022
The maximum deferral amount is split equally between 2021 and 2022. If the maximum amount is allowed and elected, Etan would repay $1,102 by December 31, 2021 and $1,102 by December 31, 2022.
If Etan is deferring something less than the maximum deferral amount, then the 2022 repayment is the smaller of $1,102 (one half of the maximum deferral) or the elected deferral amount. Any remaining deferral amount must be repaid in 2021. For example, if the deferral amount is $1,500, Etan would have to repay $1,102 in 2022 by December 31 and $398 ($1,500 - $1,102) in 2021.
The Schedule 3 worksheet is also used to calculate the two repayments depending on the maximum deferral, the allowed deferral, and the elected deferral.
See FAQs 21-24 in IRS’s Deferral of employment tax deposits and payments through December 31, 2020.
SO, REMEMBER - Section III on your SE is calculating your allowable amount, should you elect to defer you would then fill out Schedule 3. Since you are making the election to not defer, you will not be penalized for this.
