CARES Act Self-Employment Deferral for 2020

Section 2302 of the The Coronavirus Aid, Relief, and Economic Security Act (“CARES”) Act made changes that allowed self-employed people to defer 50% of the social security tax on their net earnings from March 27, 2020 to December 31, 2020. They refer to this as the “payroll tax deferral period”. 12.4% of your taxes go to Social Security, so this 50% deduction is equivalent to 6.2% of your earnings. 

The tax return deferral must be paid back 50% by December 31, 2021 and the remaining 50% by December 31, 2022. If you need some extra cash to help get through the impacts of COVID-19, this will keep some money in your pocket in the short term. But you’ll have to pay it back in subsequent years.