Deferred Social Security Taxes

Forum|Forum|5 years ago
February 22, 2021
2 replies
1 view

Why does TurboTax say I deferred some of my Social Security taxes last year? I'm pretty sure I didn't defer any taxes, unless my employer did it. What makes the application think I did this?

Best answer by RayW7

You probably did not defer anything. Your employer was allowed to defer this tax.

Check the amounts in box 3 of your W-2 and the amount in box 4. Box 4 should be 6.2% of Box 3.

This does not affect your tax return, only your social security account. For most employees no action is required.

Review the IRS Notice 2020-65 which explains more about this topic.

To Employers:

If you deferred the employee portion of Social Security tax under Notice 2020-65, when reporting total Social Security wages paid to an employee on Form W-2, Wage and Tax Statement, include any wages for which you deferred withholding and payment of employee Social Security tax in box 3 (Social security wages) and/or box 7 (Social security tips). However, do not include in box 4 (Social security tax withheld) any amount of deferred employee Social Security tax that has not been withheld.

To Employees:

If you had only one employer during 2020 and your Form W-2c, Corrected Wages and Tax Statement, for 2020 (if you get one later), only shows a correction to box 4 (or to box 14 for employees who pay RRTA tax) to account for employee Social Security (or Tier 1 RRTA tax) that was deferred in 2020 and withheld in 2021 pursuant to Notice 2020-65, no further steps are required.

RayW7Answer

Level 12

You probably did not defer anything. Your employer was allowed to defer this tax.

Check the amounts in box 3 of your W-2 and the amount in box 4. Box 4 should be 6.2% of Box 3.

This does not affect your tax return, only your social security account. For most employees no action is required.

Review the IRS Notice 2020-65 which explains more about this topic.

To Employers:

If you deferred the employee portion of Social Security tax under Notice 2020-65, when reporting total Social Security wages paid to an employee on Form W-2, Wage and Tax Statement, include any wages for which you deferred withholding and payment of employee Social Security tax in box 3 (Social security wages) and/or box 7 (Social security tips). However, do not include in box 4 (Social security tax withheld) any amount of deferred employee Social Security tax that has not been withheld.

To Employees:

If you had only one employer during 2020 and your Form W-2c, Corrected Wages and Tax Statement, for 2020 (if you get one later), only shows a correction to box 4 (or to box 14 for employees who pay RRTA tax) to account for employee Social Security (or Tier 1 RRTA tax) that was deferred in 2020 and withheld in 2021 pursuant to Notice 2020-65, no further steps are required.

A

AnneS4

Level 2

TurboTax took it upon itself to defer Social Security taxes from my husband's self-employment income. I did not request this when entering our tax info. Now we have a scary letter from the IRS about what we owe by the end of the year and had to read through our entire tax return to realize that it was the Self Employment income, not my W-2 income from an employer, and that we really do need to pay this by the end of December. It isn't much money, but I use Turbo Tax to avoid this kind of thing and the confusing IRS letters. Why did Turbo Tax DO this to us? And why are there no instructions on how to deal with it? This is probably happening to thousands of self-employed Turbo Tax users right now.

Readers, if you have only W-2 income, you can accept the earlier answer. If you have self-employment income, you are the employer and need to deal with this yourself.

Critter-3

Level 15

Sorry but the program doesn't do anything by itself ... there were several screens you had to navigate to get the taxes deferred ... do you remember these ?

Since you did not want to defer the taxes then you can simply pay them now ... review the notice for the correct way to do it.

R

rgrthumb

Level 2

I'm retired (75 years old) and don't pay SS taxes anymore. So why am I being told that I will receive a W-2C for deferred SS taxes? My W-2 is for life insurance greater than $50,000 that my past employer pays for. They did not take our SS taxes, but that shouldn't matter since I am no longer required to pay SS taxes.

Critter-3

Level 15

@rgrthumb

That is not true ... just because you get SS benefits doesn't make you immune to paying FICA taxes on something reported on a W-2 ... the box 12 codes M & N are for the "uncollected" FICA taxes on the life insurance the company pays for. So all you need to do is enter the W-2 as printed and the program will do the rest.

R

rgrthumb

Level 2

I don't get it. I've been receiving the same W-2 for the last 10 years (with no FICA taken in any of those years), and this is the first time I'm told a W-2C will be coming. What makes this year different?