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How do I report the Employee Deferred Social Security taxes from 2020 on the W-2?

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Summary

Employee Deferred Social Security tax for 2020 How do I report the Deferred Social Security tax from 2020, that was repaid in 2021?

Description

Cause

  • The Tax payer (Employer) could elect to allow their employees to defer Social Security taxes due on wages earned in 2020.
  • An employee deferred Social Security taxes for 2020 and repaid them in 2021.
  • These repaid Social Security taxes from 2020 should not be reported on the W-2 for wages earned in 2021.

Resolution

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Deferred 2020 Social security taxes should not be reported on the 2021 W-2 form.

An amended W-2C will need to be filed for the employee(s) who elected to defer Social Security taxes in 2020 and repaid them in 2021.

The IRS has very specific instructions regarding how this should be reported.

It is very important that the Social Security taxes due for 2020 and repaid in 2021 are not included on the W-2 for 2021.

Section 274 of the COVID-related Tax Relief Act of 2020, enacted on December 27, 2020, as part of the Consolidated Appropriations Act, 2021, extended the end of the time period during which employers must withhold and pay the amount of the deferred Social Security tax from April 30, 2021, to December 31, 2021. In response, Treasury and the IRS issued Notice 2021-11 modifying Notice 2020-65 to provide that the due date to withhold and pay the deferred amount of the employee portion of Social Security tax is postponed until the period beginning on January 1, 2021 and ending on December 31, 2021.

The IRS has special instructions relating to Deferred Social Security taxes owed in 2020 and repaid in 2021. If you need additional assistance regarding this topic, please contact your Tax Professional or the IRS for additional clarification.

IRS links regarding these instructions:

https://www.irs.gov/forms-pubs/form-w-2-reporting-of-employee-social-security-tax-deferred-under-notice-2020-65

https://www.irs.gov/irb/2021-11_IRB

DocLink: Presidential Memorandum to Defer SOC Taxes