When will the deferred Social Security tax start to be collected? For the last quarter of 2020, the Social Security taxes deferred by employers that participated in the payroll tax deferral obligations. After President Trump signed the executive order for the payroll tax deferral, when it was going to be collected was already states.
The uncollected payroll tax will be collected starting from January 1, 2021, and the deferred Social Security tax should be collected by April 30. The employers who participated in this will collect three months of Social Security tax over a five-month period.
This will mean more Social Security tax withheld for employees for the first five months of 2021 but since no tax was withheld for the last three months of 2020, it will have a positive impact on the 2021 taxes.
All and all though, the deferred Social Security tax will start on January 1st, and will be collected through April 30.
In early 2021, you will see a reduction in your take-home pay but the increase in the last three months of 2020 makes it up significantly and it’s actually a better deal. You can think of the payroll tax deferral as the IRS giving you an interest-free loan with easy payments spread over a long period of time.