Deferred federal taxes from "Holiday", payback being made over the year, How to factor in to my filing?

[cdthomas9]

My wife has a federal job and they opted into the federal tax "holiday" from Sep1-Dec31 2020. As a result, the federal taxes owed are a lot higher than what was paid, resulting in us owing a lot to federal on our return. She got notice that they will be increasing her federal contribution for all paychecks in 2021 to pay back the deferred amount from the holiday. How do I account for this when doing our return in TurboTax? I think TurboTax notified me that she should be getting a W2c form, will that have corrected values for the federal tax withheld? Or am I going to be forced to pay the federal taxes this year and get a very large return next year?

[MaryK4]

The deferral of taxes only applied to social security taxes, the withholding and Medicare taxes were unchanged.  In 2021, the government will take the social security taxes deferred from her weekly paychecks so her take home pay will be less than last year.  There are no adjustments you will have to make as they will be reflected on the W2 as the employer will do so.  See Form W-2 Reporting of Employee Social Security Tax Deferred under Notice 2020-65 for how the employer reports the information.

[cdthomas9]

So, I just file as is, and pay the allotted amount as shown in TurboTax? The amount they're taking out now we'll just get back next year, since we're over paying at this point? Her W2 shows the amount they took out up til September, so its low.

[cdthomas9]

Oh, you mean that the 'holiday' doesn't affect 2020 filing at all, since its only the SS portion. I think I got it now. Thanks.