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.
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.