I just received a vague notice from the IRS about needing to pay my deferred Self Employment Tax for 2020 tax year. They also denied applying my Turbo Tax calculated 2020 refund to my 2021 estimated payments.
Doing some research it appears Turbo Tax defaulted to deferring my Self Employment tax. I was not aware that I had elected to pay this at a later date. The Turbo Tax Filling instructions show my future estimated payments due and refund applied, but it does not show that I need to pay self employment tax.
Is the IRS correct in not applying my refund which is contrary to what Turbo Tax filing shows?
I am guessing the IRS is applying the refund to the deferred self employment tax, but that would not be a deferral would it. Also if this is the case am I late on paying my estimated by the amount of the refund they did not apply?
Why doesn't Turbo Tax filing instructions show the payment dates and amounts due for the deferred Self Employment tax?
One-half of the deferred taxes must be paid no later than December 31, 2021, with the remaining balance due by December 31, 2022.
You will need to contact the IRS to see if they are applying your refund to your 2020 deferred self employment taxes.
the IRS should not be applying any overpayment to the deferred self-employment tax. two completely different things. you should be getting a notice in 2 to 3 weeks explaining what the IRS changed that affected your refund. you should also be able to get a transcript of your tax return which shows amounts per return and amounts per IRS computers.
Shouldn't Turbo Tax provide a payment form or reminder form for the deferred 2020 self employment tax return amount?
The IRS notice about not applying my refund is three months old. It does not appear they are going to be sending a notice of clarification.
I spent two hours on IRS hold and they confirmed that they have applied my refund to the deferred self employment tax.
Here are the screens in the program about the deferral that you should have seen and completed ... the payment info is in the PDF of the return if you save one with the worksheets ... it is not the responsibility of TT to also send you email warnings ... that job belongs to the IRS which they did ... as for taking the refund to apply to the deferred taxes ... that is something no one expected since it was not posted by the IRS... if they had TT would have it in the program.
I did not say TT should send email warnings about paying deferred taxes. It would be helpful for Turbo Tax to show when and how much deferred taxes are due, just as TT does in their filing instructions showing how much and when to pay estimated taxes.
They do in the program ... last screenshot in my last answer ... however when you filed the return the IRS had not yet posted the HOW to do it so the program did not have that info to give hence the IRS sent a notification. https://www.irs.gov/newsroom/what-employers-need-to-know-about-repayment-of-deferred-payroll-taxes#:....
It would make better sense for Turbo Tax to include any deferred payments due on the printouts showing estimated tax due for the return. If a due date was not available the printout should have said that. That would be comprehensive and in keeping with TT policy of informing customers about their future tax liability.
I do not recall any page while doing my tax return in TT that told me I would owe money in future other than my estimated taxes. By the way TT applied my overpayment to my estimated taxes, but the IRS takes any overpayment and applies it to the deferred self employment tax, so my estimated taxes are short and past due.
TT should not have applied my overpayment to estimated tax.