IRS Issues Guidance on W2 Reporting for Employee SS Tax Deferrals

October 30, 2020

IRS Counsel Issued Guidance Clarifying Certain Provisions to Employers On How To Report Social Security Tax Amounts Deferred By Employees

At A Glance

  • On August 8, 2020 President Trump Issued a Presidential Memorandum allowing deferment of the employee portion of Social Security Tax
  • IRS Counsel issued guidance August 28 ,2020 via Notice 2020-65 clarifying certain provisions of the memo, and limiting the $4,000.00 applicable bi-weekly wages to a per pay period basis
  • IRS Issued W-2 Reporting guidance to inform Employers how Employee tax deferrals should be reported on the 2020 Form W2


IRS recently issued additional guidance  in addition to previous guidance issued under Notice 2020-65 to provide guidance to employers on how to report Social Security tax amounts deferred by employees in 2020.

The guidance states that employer should continue to report wages associated with the deferred taxes in box 3 (Social Security Wages) of the form W2 for 2020.  Any amount of deferred taxes should NOT be reported in box 4 (Social Security Tax) of the form W2 for 2020.

Once employers collect the deferred amount, Employers should issue a 2020 form W2C to report the amount of tax collected that was previously deferred and report the adjustment in box 4 reporting the amount originally reported, and as adjusted for the amounts collected in 2021.

Employers should report these amounts to the SSA as soon as possible after the collection of the deferred amounts in 2021.

Next Steps

Paylocity will begin the process of making the necessary reporting changes required for 2020 W2 reporting as required.  We will provide further updates regarding the required changes for 2021 in the coming weeks.