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2012 Tax Forms 1040

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2012 Tax Forms 1040

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Is My Pension or Annuity Payment Taxable?

This application will help you determine if your pension or annuity payment from an employer sponsored retirement plan is taxable.  This application does not address Individual Retirement Arrangements (IRAs).

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  • All income documents
  • Federal income tax withheld (Form W2-P or Form1099)

Estimated Completion Time: 11 minutes. However: 5 minutes of inactivity will end the interview and you will be forced to start over.

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Page Last Reviewed or Updated: 14-Feb-2014

The 2012 Tax Forms 1040

2012 tax forms 1040 Publication 957 - Main Content Table of Contents 1. 2012 tax forms 1040 What is Back Pay?Reporting Back Pay Back Pay Under a Statute Nonstatutory Back Pay Format for Report to the SSA Questions 2. 2012 tax forms 1040 Special Wage PaymentsReporting Special Wage Payments Reporting Nonstatutory (Nonqualified) Stock Options as Special Wage Payments Nonqualified Deferred Compensation and Section 457 Plans Additional Reporting Examples for Nonqualified Deferred Compensation (NQDC) PlansSpecial rule for box 11 of Form W-2 (distributions and deferral in the same year). 2012 tax forms 1040 1. 2012 tax forms 1040 What is Back Pay? Back pay is pay received in a tax year(s) for actual or deemed employment in an earlier tax year(s). 2012 tax forms 1040 For social security coverage and benefit purposes, all back pay, whether or not under a statute, is wages if it is payment for covered employment. 2012 tax forms 1040 Damages for personal injury, interest, penalties, and legal fees included with back pay awards are not wages. 2012 tax forms 1040 Report all back pay. 2012 tax forms 1040 However, the tax year(s) for which back pay is credited as wages for social security purposes is different if it is awarded under a statute. 2012 tax forms 1040 See Back Pay Under a Statute , later, for more information. 2012 tax forms 1040 Reporting Back Pay The Internal Revenue Service (IRS) and the SSA consider back pay awards to be wages. 2012 tax forms 1040 However, for income tax purposes, the IRS treats all back pay as wages in the year paid. 2012 tax forms 1040 Employers should use Form W-2, Wage and Tax Statement, or electronic wage reports to report back pay as wages in the year they actually pay the employee. 2012 tax forms 1040 The SSA no longer accepts reports on tapes, cartridges, and diskettes. 2012 tax forms 1040 Example. 2012 tax forms 1040 In 2012, Terry Morris earned wages of $50,000. 2012 tax forms 1040 In the same year, she received $100,000 in settlement of a back pay case against her employer that covered the periods January 2007 through December 2011. 2012 tax forms 1040 Her employer properly reflected social security wages of $110,100 and Medicare wages of $150,000 on her 2012 Form W-2. 2012 tax forms 1040 However, if an employer did not include back pay wages on a previously filed Form W-2, magnetic media, or electronically filed wage report, the employer should prepare a wage correction report, Form W-2c, Corrected Wage and Tax Statement, or electronically filed report, to add the back pay award to the wages previously reported. 2012 tax forms 1040 Example. 2012 tax forms 1040 If, in the above example, Terry Morris' employer had prepared her 2012 Form W-2 reporting social security and Medicare wages of only $50,000 each, the employer would have to correct that report. 2012 tax forms 1040 A Form W-2c correcting the 2012 Form W-2 would show previously reported social security and Medicare wages of $50,000 and the correct amount of $110,100 for social security wages and $150,000 for Medicare wages. 2012 tax forms 1040 SSA treatment of back pay under a statute. 2012 tax forms 1040   Under the law, the SSA credits back pay awarded under a statute to an individual's earnings record in the period(s) the wages should have been paid. 2012 tax forms 1040 This is important because wages not credited to the proper year may result in lower social security benefits or failure to meet the requirements for benefits. 2012 tax forms 1040   However, back pay under statute payments will remain posted to the employee's social security earnings record in the year reported on Form W-2 (or Form W-2c) unless the employer or employee notifies the SSA (in a separate, special report) of the back pay under a statute payment. 2012 tax forms 1040 Then, the SSA can allocate the statutory back pay to the appropriate periods. 2012 tax forms 1040   If a back pay award is not made under a statute, the SSA credits back pay as wages in the year paid. 2012 tax forms 1040    If employers do notify the SSA of this payment, they should prepare a special report (with the information noted below) and send it to: Social Security Administration Attn: CPS Back Pay Staff 7-B-15 SWT 1500 Woodlawn Drive Baltimore, MD 21241-0001 Be sure to send this special report to the above address because the SSA handles it separately from other reports. 2012 tax forms 1040    If you paid the back pay award in the same tax year to which it applies, report the wages on that year's Form W-2. 2012 tax forms 1040 No further action is necessary. 2012 tax forms 1040 Example. 2012 tax forms 1040 In 2012, Judy Wilson received a salary of $30,000 and a back pay under statute award of $2,000 for the period January through June 2012. 2012 tax forms 1040 Her employer properly reported wages of $32,000 for social security and Medicare on her 2012 Form W-2. 2012 tax forms 1040 No further action is necessary. 2012 tax forms 1040 Information the SSA needs to properly credit back pay under a statute (special report). 2012 tax forms 1040   After you complete the special report, you or the employee should send it to the SSA when or after you submit the Form W-2 (on paper or electronically) to the SSA for the year you pay the statutory back pay to the employee. 2012 tax forms 1040 There is no statute of limitations on the filing of the special report to enable the SSA to allocate the wages. 2012 tax forms 1040 The special report must include the following information. 2012 tax forms 1040 The employer's name, address, and employer identification number (EIN). 2012 tax forms 1040 A signed statement citing the federal or state statute under which the payment was made. 2012 tax forms 1040 If the statute is not identified, the SSA will assume the payment was not under a statute and will not allocate to earlier period(s). 2012 tax forms 1040 The name and telephone number of a person to contact. 2012 tax forms 1040 The SSA may have additional questions concerning the back pay case or the individual employee's information. 2012 tax forms 1040 A list of employees receiving the payment and the following information for each employee: The tax year you paid and reported the back pay. 2012 tax forms 1040 The employee's social security number (SSN). 2012 tax forms 1040 The employee's name (as shown on his or her social security card). 2012 tax forms 1040 The amount of the back pay award excluding any amounts specifically designated otherwise, for example, damages for personal injury, interest, penalties, and legal fees. 2012 tax forms 1040 The period(s) the back pay award covers (beginning and ending dates—month and year). 2012 tax forms 1040 The other wages paid subject to social security and/or Medicare taxes and reported in the same year as the back pay award (if none, show zero)*. 2012 tax forms 1040 Do not include the back pay award shown in that wage report. 2012 tax forms 1040 If you originally submitted the report under an establishment number, show that number and the amount of money that is to remain under that establishment number. 2012 tax forms 1040 The amount to allocate to each reporting period*. 2012 tax forms 1040 This includes any amount you want allocated (if applicable) to the tax year of the award payment. 2012 tax forms 1040 If you do not give the SSA specific amounts to allocate, the SSA does the allocation by dividing the back pay award by the number of months or years covered by the award. 2012 tax forms 1040 *Note. 2012 tax forms 1040   For periods before January 1, 1978 (before January 1, 1981, for state and local government employers covered by a Section 218 agreement), show the wage amounts for each calendar quarter ending March 31, June 30, September 30, and December 31. 2012 tax forms 1040 For all tax years, show and identify the social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) separately. 2012 tax forms 1040 MQGE is applicable to federal employees beginning in 1983, and for certain state and local government employees beginning in 1986. 2012 tax forms 1040 For tax years 1991 and later, list the social security and Medicare wages separately. 2012 tax forms 1040 If you originally reported the individual's wages under an establishment or payroll record unit number, show the amount of wages to remain in the award year for that number and furnish that number to the SSA along with the EIN. 2012 tax forms 1040 Back Pay Under a Statute Back pay awarded under a statute is a payment by an employer following an award, determination, or agreement approved or sanctioned by a court or government agency responsible for enforcing a federal or state statute that protects an employee's right to employment or wages. 2012 tax forms 1040 Examples of pertinent statutes include: Age Discrimination in Employment Act, Americans with Disabilities Act, Equal Pay Act, Fair Labor Standards Act, National Labor Relations Act, State minimum wage laws, and State statutes that protect rights to employment and wages. 2012 tax forms 1040 Payments based on laws that have a similar effect to those listed above also may qualify as payments made under a statute. 2012 tax forms 1040 Back pay awards, under some of the statutes listed above, may be compensation for personal injury and not pay for employment. 2012 tax forms 1040 Such awards are not wages for social security coverage purposes. 2012 tax forms 1040 If a court-approved or sanctioned settlement agreement states that the agreement is not an admission of discrimination, liability, or act of wrongdoing, the statement does not change the nature of a back pay award. 2012 tax forms 1040 The payments made in such a settlement may still be back pay and wages under the rules discussed here. 2012 tax forms 1040 Nonstatutory Back Pay A payment for back wages negotiated between an employer and employee without an award, determination, or agreement approved or sanctioned by a court or government agency, the payment is not made under a statute. 2012 tax forms 1040 Delayed wage payments and retroactive pay increases resulting from union negotiation or payments under local ordinances or regulations are back pay and are wages. 2012 tax forms 1040 However, they are not payments made under a statute. 2012 tax forms 1040 If you are uncertain whether the back pay award was under a qualified statute, you may need to contact your personnel department or legal counsel or the attorney who filed the suit. 2012 tax forms 1040 Format for Report to the SSA Use the format shown in Table 1, later, to send the SSA the information needed to properly credit back pay under a statute. 2012 tax forms 1040 In a cover letter, include: Name and address of the employer, Statute under which you paid the back pay, Name and telephone number of the employer contact, and Signature of the reporting official. 2012 tax forms 1040 Under certain circumstances, back pay may be a special wage payment and excluded from wages counted under the social security earnings test. 2012 tax forms 1040 If you pay back pay to an employee age 61 or older, report it to the SSA in accordance with this section. 2012 tax forms 1040 Read Special Wage Payments, later, for additional reporting instructions. 2012 tax forms 1040 Questions If you have questions concerning back pay under a statute, call the SSA at 1-800-772-6270. 2012 tax forms 1040 Exception. 2012 tax forms 1040   If you are a state or local government employer who was covered by an agreement under Section 218 of the Social Security Act before January 1, 1987, and you paid a back pay award before January 1, 1987, which you did not report to the SSA, contact your state Social Security Administrator's office. 2012 tax forms 1040 Table 1. 2012 tax forms 1040 Format for Report (Under Covering Letter) to Request SSA to Allocate Back Pay Under Statute Wages Employer's EIN: xx-xxxxxxx Tax Year in Which Award Payment Was Paid: 2012 (1) SSN and Employee Name (2)1 Award Amount and Period(s) (3)2,3 Other Soc. 2012 tax forms 1040 Sec. 2012 tax forms 1040 /Med. 2012 tax forms 1040 Wages Paid In Award Year (4)3 Allocation     Soc. 2012 tax forms 1040 Sec. 2012 tax forms 1040 Med. 2012 tax forms 1040 /MQGE Year Soc. 2012 tax forms 1040 Sec. 2012 tax forms 1040 Med. 2012 tax forms 1040 /MQGE xxx-xx-xxxx HELEN T. 2012 tax forms 1040 SMITH $100,000 1/2009 - 12/2012 $40,000 $40,000 2009 2010 2011 2012 $20,000 25,000 27,000 28,000 $20,000 25,000 27,000 28,000 xxx-xx-xxxx SAM W. 2012 tax forms 1040 EVANS 30,000 7/89-12/91 -0- -0- 1989 1990 1991   6,000 12,000 12,000 xxx-xx-xxxx ROLAND S. 2012 tax forms 1040 ADAMS 15,000 7/80-12/81 -0- -0- 9/80 12/80 1981 3,500 3,500 8,000   1Exclude amounts specifically designated as damages, penalties, etc. 2012 tax forms 1040  2Exclude the amount of back pay, if any, included in that amount. 2012 tax forms 1040  3For periods before January 1, 1978 (and for state and local government (Section 218) employers before January 1, 1981), show the wage amounts by calendar quarters. 2012 tax forms 1040 The social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) must be shown separately FOR ALL YEARS. 2012 tax forms 1040 (Wages subject ONLY to MQGE would be shown in the Medicare/MQGE column; no wages would be shown in the Soc. 2012 tax forms 1040 Sec. 2012 tax forms 1040 column. 2012 tax forms 1040 ) For tax years 1991 and later, the social security and Medicare wages must be listed separately. 2012 tax forms 1040 Explanation of examples. 2012 tax forms 1040 Helen T. 2012 tax forms 1040 Smith–The back pay award, excluding interest, was $100,000 for the periods 1/2009-12/2012. 2012 tax forms 1040 In 2012, this employee was also paid $40,000 in other wages. 2012 tax forms 1040 (Her Form W-2 for 2012 reported $110,100 for social security and $140,000 for Medicare. 2012 tax forms 1040 The SSA allocation will result in adjusted posted wages of $68,000 for social security and $68,000 for Medicare for 2012. 2012 tax forms 1040 ) Sam W. 2012 tax forms 1040 Evans–The back pay award was $30,000 for the periods 7/89-12/91. 2012 tax forms 1040 This employee was hired in 1989 and was subject to MQGE only. 2012 tax forms 1040 He was no longer employed by this governmental employer in 2012. 2012 tax forms 1040 (His Form W-2 for 2012 reported $30,000 for social security and $30,000 for Medicare. 2012 tax forms 1040 After the SSA allocation, he will not have any net posted wages for 2012. 2012 tax forms 1040 ) Roland S. 2012 tax forms 1040 Adams–The back pay award was $15,000 for the periods 7/80-12/81. 2012 tax forms 1040 He was no longer employed by this state and local government (Section 218) employer in 2012. 2012 tax forms 1040 (His Form W-2 for 2012 reported $15,000 for social security and $15,000 for Medicare; after the SSA allocation, he will not have any net posted wages for 2012. 2012 tax forms 1040 ) If the state Social Security Administrator's office needs more information, they can contact the SSA at the following address:   Social Security Administration Office of Income Security Programs Office of Earnings and Program Integrity Policy 6401 Security Boulevard 2506 OPS Baltimore, MD 21235 2. 2012 tax forms 1040 Special Wage Payments A special wage payment (SWP) is an amount paid by an employer to an employee (or former employee) for services performed in a prior year. 2012 tax forms 1040 Employers should report to the SSA special wage payments made to employees and former employees who are recipients of social security retirement benefits. 2012 tax forms 1040 Special wage payments made to a retired employee receiving social security or to an employee who continues to work while receiving social security benefits may reduce the benefits the individual receives if not reported to the SSA. 2012 tax forms 1040 Special wage payments may include (but are not limited to): Accumulated sick and vacation pay, Back pay, Bonuses, Deferred compensation, Payments because of retirement, Sales commissions, Severance pay, and Stock options. 2012 tax forms 1040 Note. 2012 tax forms 1040 Payments made after retirement that are part of the normal payroll cycle should not be routinely reported as special wage payments. 2012 tax forms 1040 Earnings Test. 2012 tax forms 1040   Benefits paid to a social security beneficiary under full retirement age may be reduced if the beneficiary continues to work. 2012 tax forms 1040 The SSA uses the information in boxes 1, 3, and 5 of Form W-2 to determine the beneficiary's current year earnings. 2012 tax forms 1040 Special wage payments, which are for services performed in a prior year, will increase the current year earnings on Form W-2, which also may result in a reduction in the beneficiary's benefits. 2012 tax forms 1040 If a benefit is reduced because of a special wage payment, the beneficiary must get documentation from the employer before the SSA can restore the deducted portion. 2012 tax forms 1040 Therefore, employer reports of special wage payments help prevent incorrect benefit reductions. 2012 tax forms 1040 Reporting Special Wage Payments Employers must report special wage payments for income tax purposes and social security and Medicare taxes in the year received. 2012 tax forms 1040 Report income, social security, and/or Medicare taxes for special wage payments on Form W-2. 2012 tax forms 1040 See Nonqualified Deferred Compensation and Section 457 Plans, later, for reporting nonqualified deferred compensation plan deferrals and payments on Form W-2. 2012 tax forms 1040 In addition, report to the SSA special wage payments made during the reporting year to retired employees and employees who continue to work while receiving social security benefits. 2012 tax forms 1040 Submit reports after the close of the tax year. 2012 tax forms 1040 To avoid delays in processing, submit reports in time to reach the SSA by April 1. 2012 tax forms 1040 Use one of the following reporting methods. 2012 tax forms 1040 Electronic reporting. 2012 tax forms 1040   Special wage payment files can be sent electronically by logging onto Business Services Online (BSO) via the socialsecurity. 2012 tax forms 1040 gov website. 2012 tax forms 1040 BSO enables organizations and authorized individuals to conduct business with and submit confidential information to the Social Security Administration. 2012 tax forms 1040 You must register to use this website. 2012 tax forms 1040 The web address is www. 2012 tax forms 1040 socialsecurity. 2012 tax forms 1040 gov/bso/bsowelcome. 2012 tax forms 1040 htm. 2012 tax forms 1040   Use the specifications and record layout shown in  Table 2, later. 2012 tax forms 1040 Only one file at a time may be submitted. 2012 tax forms 1040 If your file is large (>10MB), or you have a slow internet connection, the transmission will be faster if the file is zipped. 2012 tax forms 1040 A zipped file contains a file that has been compressed to reduce its file size. 2012 tax forms 1040 WinZip and PKZIP are examples of acceptable compression packages. 2012 tax forms 1040   Electronic submissions not meeting the specifications in Table 2 will be rejected. 2012 tax forms 1040 Paper listing. 2012 tax forms 1040   A paper listing can be used to report special wage payments to several employees. 2012 tax forms 1040 Use the format shown in Table 3, later. 2012 tax forms 1040 Submit paper listings to the local SSA office nearest your place of business. 2012 tax forms 1040 Visit www. 2012 tax forms 1040 socialsecurity. 2012 tax forms 1040 gov/locator to find a Social Security office near you. 2012 tax forms 1040 Form SSA-131. 2012 tax forms 1040   Use Form SSA-131 to report special wage payments made to an employee. 2012 tax forms 1040 Also use this form to report nonqualified deferred compensation and section 457 plan deferrals and payments that could not be reported in box 11 of Form W-2. 2012 tax forms 1040    This image is too large to be displayed in the current screen. 2012 tax forms 1040 Please click the link to view the image. 2012 tax forms 1040 Publication 957 Reporting Back Pay to the Social Security Administration Instructions for Form SSA–131   EMPLOYER INSTRUCTIONS FOR COMPLETING SPECIAL WAGE PAYMENT FORM 1. 2012 tax forms 1040 Provide the EIN that was used or will be used to report the employee's wages on the Form W-2. 2012 tax forms 1040 2. 2012 tax forms 1040 Enter the date the employee retired. 2012 tax forms 1040 Enter “Not Retired” if the employee has not retired. 2012 tax forms 1040 3. 2012 tax forms 1040 Enter the date that the employee last performed services; was not expected to return to work; and was not subject to recall to render additional services. 2012 tax forms 1040 This date should be the same as or earlier than the date in item “2”. 2012 tax forms 1040 Enter “Not Retired” if the employee has not retired. 2012 tax forms 1040 4. 2012 tax forms 1040 Enter the wages that were paid to the employee in the tax year that were for services that were performed in years prior to the tax year or that were paid on account of retirement. 2012 tax forms 1040  Examples (not all inclusive) of payments to be included: Payments in lieu of vacation that were earned in a year prior to the tax year. 2012 tax forms 1040 Accumulated sick payments which were paid in a lump sum based on “retirement” as the sole condition of payment. 2012 tax forms 1040 Accumulated sick payments paid at or after the date in item 3, which were earned in a year prior to the tax year. 2012 tax forms 1040 Payments “on account of retirement”–dismissal, severance or termination pay paid because of retirement. 2012 tax forms 1040 Bonuses which are paid pursuant to a prior contract, agreement or promise causing the employee to expect such payments regularly; or announced to induce the employee to work more steadily, rapidly or efficiently or to remain with the employer. 2012 tax forms 1040 Stock Options. 2012 tax forms 1040   Do not include in item “4” payments: For annual, sick, holiday, or vacation pay if used (absence from work) prior to the date of retirement (earlier of items “2” or “3”). 2012 tax forms 1040 That were reported or will be reported under “Nonqualified Plans” on the Form W-2. 2012 tax forms 1040 That were deducted from the employee's wages and paid to a deferred compensation plan (e. 2012 tax forms 1040 g. 2012 tax forms 1040 , 401k). 2012 tax forms 1040 Employees health and dental plan benefits (non-covered/non-taxable for Social Security Wages). 2012 tax forms 1040 Bonuses earned and paid in the tax year. 2012 tax forms 1040 5. 2012 tax forms 1040 Check whether payments listed in item 4 will be made for years after the tax year. 2012 tax forms 1040 If yes, please show the amounts and years in which these will be paid, if known. 2012 tax forms 1040 6. 2012 tax forms 1040 Nonqualified deferred compensation and section 457 plans only. 2012 tax forms 1040 If you were unable to report nonqualified deferred compensation or section 457 plan payments and deferrals (contributions) on Form W-2 because both payments and deferrals occurred during the year, show the amount of wages earned by the employee during the tax year. 2012 tax forms 1040 Generally, the wages earned will be the compensation reported in block 1 of Form W-2 less payments from a nonqualified deferred compensation (or 457) plan, but including any amounts deferred under the plan during the tax year (See IRS Publication 957). 2012 tax forms 1040 Paperwork/Privacy Act Notice: This report is authorized by regulation 20 CFR 404. 2012 tax forms 1040 702. 2012 tax forms 1040 The information that you provide will be used in making a determination regarding the amount of Social Security benefits payable to the above named individual. 2012 tax forms 1040 While your response is voluntary, if you do not respond we may not be able to make a correct determination regarding the amount of Social Security benefits payable to the above named individual for the year in question. 2012 tax forms 1040 We may also use the information you give us when we match records by computer. 2012 tax forms 1040 Matching programs compare our records with those of other Federal, State, or local government agencies. 2012 tax forms 1040 Many agencies may use matching programs to find or prove that a person qualifies for benefits paid by the Federal Government. 2012 tax forms 1040 The law allows us to do this even if you do not agree to it. 2012 tax forms 1040 Explanations about these and other reasons why information you provide us may be used or given out are available in Social Security Offices. 2012 tax forms 1040 If you want to learn more about this, contact any Social Security Office. 2012 tax forms 1040 The Paperwork Reduction Act: This information collection meets the clearance requirements of 44 U. 2012 tax forms 1040 S. 2012 tax forms 1040 C. 2012 tax forms 1040 §3507, as amended by Section 2 of the Paperwork Reduction Act of 1995. 2012 tax forms 1040 You are not required to answer these questions unless we display a valid Office of Management and Budget control number. 2012 tax forms 1040 We estimate that it will take you about 20 minutes to read the instructions, gather the necessary facts, and answer the questions. 2012 tax forms 1040 Form SSA-131 (8-2001) EF (06-2002)   Submit Form SSA-131 to the SSA office nearest your place of business. 2012 tax forms 1040 Or, the employee can submit it to the SSA office handling the claim. 2012 tax forms 1040 You or the employee must submit this form before the SSA can exclude the special wage payments for purposes of the earnings test. 2012 tax forms 1040 If reporting on more than one employee, complete a separate Form SSA-131 for each employee or use the paper listing format (except for reporting nonqualified and section 457 plan deferrals and payments) in Table 3. 2012 tax forms 1040 Do not report payments from nonqualified deferred compensation or section 457 plans that were reported in box 11 of Form W-2. 2012 tax forms 1040 Use Form SSA-131 if deferrals to and payments from nonqualified or section 457 plans occurred during the tax year. 2012 tax forms 1040 Reporting Nonstatutory (Nonqualified) Stock Options as Special Wage Payments A nonstatutory (nonqualified) option to purchase stock which is exercised in a year after the year in which the option was earned is a special wage payment. 2012 tax forms 1040 It should not count for the social security earnings test. 2012 tax forms 1040 Nonstatutory (nonqualified) options exercised as special wage payments by retired employees or employees who continue to work while receiving social security benefits should be reported by employers using the above reporting methods. 2012 tax forms 1040 Nonqualified Deferred Compensation and Section 457 Plans A nonqualified deferred compensation plan is a plan or arrangement established and maintained by an employer for one or more of its employees that provides for the deferral of compensation, but does not meet the requirements for a tax-qualified deferred compensation plan. 2012 tax forms 1040 For social security and Medicare purposes, deferred compensation plans for employees of state and local governments (section 457 plans) are treated the same as nonqualified plans. 2012 tax forms 1040 Nonqualified and section 457 plans are reported differently than other special wage payments. 2012 tax forms 1040 See Reporting Amounts Deferred to Nonqualified and Section 457 Plans below for specific instructions. 2012 tax forms 1040 Reporting Amounts Deferred to Nonqualified and Section 457 Plans Generally, when the related services are performed, nonqualified deferred compensation is subject to social security and Medicare tax when deferred. 2012 tax forms 1040 However, if nonqualified and section 457 plans contain provisions that delay the employee's right to receive payments from the plan, a period of substantial risk of forfeiture exists. 2012 tax forms 1040 The plans' deferrals, or contributions, are not subject to social security and Medicare taxes until the period of substantial risk of forfeiture ends. 2012 tax forms 1040 No risk of forfeiture. 2012 tax forms 1040   If there is no risk of forfeiture, report wage amounts deferred to a nonqualified deferred compensation or section 457 plan in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. 2012 tax forms 1040 Example. 2012 tax forms 1040 Company X's nonqualified deferred compensation plan allows the deferral of up to $20,000 of employee salaries each year. 2012 tax forms 1040 The plan has no risk of forfeiture. 2012 tax forms 1040 In 2012, Employee A defers $20,000 to the plan from a total salary of $200,000. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 $200,000 Box 3* 110,100 Box 5 200,000 *Wage base maximum for tax year 2012 Risk of forfeiture lapses before retirement. 2012 tax forms 1040   If the substantial risk of forfeiture lapses before the employee retires, report all past contributions to the plan (or the value of the plan), including accumulated earned interest, in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. 2012 tax forms 1040 The accumulated deferrals are reported along with any other social security and Medicare wages earned during the year. 2012 tax forms 1040   Report in box 11 of Form W-2 the amount of deferrals, including any accumulated interest, that became taxable for social security and Medicare taxes during the year (but were for prior year services) because the deferred amounts were no longer subject to a substantial risk of forfeiture. 2012 tax forms 1040 If the employee continues working, future deferrals are social security and Medicare wages when they are earned. 2012 tax forms 1040    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. 2012 tax forms 1040 Risk of forfeiture lapses at retirement. 2012 tax forms 1040   When an employee's right to a payment is contingent upon working until retirement, report all past contributions to the plan (or the value of the plan), including accumulated earned interest, as social security and/or Medicare wages in the year of retirement. 2012 tax forms 1040 Add the amount to other wages paid in that year, and enter in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. 2012 tax forms 1040   Report in box 11 of Form W-2 the amount of deferrals, including any accumulated interest, that became taxable for social security and Medicare taxes during the year (but were for prior year services) because the deferred amounts were no longer subject to a substantial risk of forfeiture. 2012 tax forms 1040    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. 2012 tax forms 1040 Example—risk of forfeiture. 2012 tax forms 1040 At the end of the risk-of-forfeiture period for Company Y's nonqualified deferred compensation plan, Employee B's accumulated deferrals, plus interest earned by the plan, are $120,000, not including B's $20,000 deferral for this year. 2012 tax forms 1040 B's wages, including this year's deferred amount, are $80,000. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 $60,000 Box 3* 110,100 Box 5 200,000 Box 11 120,000 *Wage base maximum for tax year 2012 Reporting Payments From Nonqualified and Nongovernmental Section 457 Plans When an employee or former employee retires and begins receiving payments (distributions) from a nonqualified or nongovernmental section 457 plan, report the payments in boxes 1 and 11 of Form W-2. 2012 tax forms 1040 Report payments (distributions) from a governmental section 457 plan on Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 2012 tax forms 1040 Example. 2012 tax forms 1040 Employee D retired from the XYZ company and began receiving social security benefits. 2012 tax forms 1040 XYZ paid D a $12,000 bonus upon retirement for sales made in a prior year, and D received $25,000 in payments from XYZ's nonqualified deferred compensation plan. 2012 tax forms 1040 In addition, D agreed to continue performing services for XYZ, but on a part-time basis for wages of $15,000 per year. 2012 tax forms 1040 D made no deferrals to the nonqualified plan this year. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 $52,000 Box 3 27,000 Box 5 27,000 Box 11 25,000 Report the $12,000 bonus to the SSA using electronic reporting, a paper listing, or Form SSA-131. 2012 tax forms 1040 For more information, see Reporting Special Wage Payments , earlier. 2012 tax forms 1040 Reporting Payments and Deferrals in the Same Year Do not complete box 11 when payments (distributions) are made from a nonqualified plan and deferrals are reported in boxes 3 and/or 5 of Form W-2 (including current year deferrals). 2012 tax forms 1040 Report to the SSA on Form SSA-131 the total amount the employee earned during the tax year. 2012 tax forms 1040 Normally, the amount earned is the amount reported in box 1 of Form W-2 less payments from a nonqualified or section 457 plan, but including any amounts deferred under the plan during the tax year. 2012 tax forms 1040 See Form SSA-131 and its instructions, earlier. 2012 tax forms 1040 Example. 2012 tax forms 1040 Employee K retired this year from Company XYZ and began receiving social security benefits. 2012 tax forms 1040 During the year he earned wages of $50,000 and deferred $35,000 of the wages into the company's nonqualified deferred compensation plan. 2012 tax forms 1040 K also received $75,000 in payments from the company's nonqualified plan. 2012 tax forms 1040 Form W-2 Completion Amount Special Wage Payment $75,000 Wages 50,000 Minus: deferral 35,000 Total reported in Box 1 $90,000     Wages including deferral reported in  Boxes 3 and 5 $50,000     Leave Box 11 blank. 2012 tax forms 1040 File Form SSA-131 -0-     Form SSA-131 Completion Amount from Box 1 of Form W-2 $90,000 Minus: payments from a nonqualified plan 75,000 Plus: amounts deferred into the plan during the year 35,000 Total wages earned for purposes of Form SSA-131 (item 6) $50,000 Additional Reporting Examples for Nonqualified Deferred Compensation (NQDC) Plans It is not necessary to show amounts deferred during the year under an NQDC plan subject to section 409A. 2012 tax forms 1040 If you report section 409A deferrals, show the amount in box 12 of Form W-2 using code Y. 2012 tax forms 1040 For more information, see Notice 2008-115, 2008-52 I. 2012 tax forms 1040 R. 2012 tax forms 1040 B. 2012 tax forms 1040 1367, available at www. 2012 tax forms 1040 irs. 2012 tax forms 1040 gov/irb/2008-52_IRB/ar10. 2012 tax forms 1040 html. 2012 tax forms 1040 Special reporting rules apply when an NQDC plan is not compliant with section 409A (when there has been a “plan failure”). 2012 tax forms 1040 Income included under section 409A from an NQDC plan is reported in box 1 and box 12 of Form W-2 using code Z. 2012 tax forms 1040 See Notice 2008-115. 2012 tax forms 1040 The following examples use small dollar amounts for illustrative purposes. 2012 tax forms 1040 However, the amount reported in box 3 of Form W-2 is always limited by the social security earnings wage base (for example, $110,100 for 2012). 2012 tax forms 1040 The term “vested” in the following examples means that the amount deferred is not subject to a substantial risk of forfeiture. 2012 tax forms 1040 Conversely, the term “not vested” means that the amount deferred is subject to a substantial risk of forfeiture. 2012 tax forms 1040 The examples assume that the NQDC plan is in compliance with section 409A, and that amounts deferred under the plan are not includible in gross income as they are deferred. 2012 tax forms 1040 For purposes of the examples, it is assumed that the regular pay of the employee is remuneration for employment and wages for employment tax purposes except to the extent the deferral of a portion of the regular pay results in a reduction in wages. 2012 tax forms 1040 Example 1: Deferral that is immediately vested (no substantial risk of forfeiture) with no distributions and no vesting of prior-year deferrals. 2012 tax forms 1040 For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into her employer’s NQDC plan. 2012 tax forms 1040 The deferral of $20 was vested upon deferral and there was an employer match of $10 under the plan, which was also vested. 2012 tax forms 1040 Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 vested deferral) $180 Box 3 ($200 Regular pay plus $10 Employer match, vested) 210 Box 5 ($200 Regular pay plus $10 Employer match, vested) 210 Box 11 -0- Example 2: Deferral with delayed vesting (substantial risk of forfeiture) of employee and employer portions (no distributions and no vesting of prior-year deferrals). 2012 tax forms 1040 For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s nonqualified deferred compensation plan. 2012 tax forms 1040 The deferral of $20 was not vested upon deferral, and there was an employer match of $10 under the plan, which was also not vested. 2012 tax forms 1040 Regular pay = $200; Deferral, not vested = $20; Employer match, not vested = $10. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 Deferral, not vested) $180 Box 3 ($200 Regular pay minus $20 Deferral, not vested) 180 Box 5 ($200 Regular pay minus $20 Deferral, not vested) 180 Box 11 -0- Example 3: Deferral that is immediately vested with prior-year deferrals and investment earnings on the prior-year deferrals that are now vesting (no distributions). 2012 tax forms 1040 For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s nonqualified deferred compensation plan. 2012 tax forms 1040 The deferral of $20 was vested upon deferral. 2012 tax forms 1040 During the year, $100 of prior-year deferrals and $15 of investment earnings on the $100 of prior-year deferrals became vested. 2012 tax forms 1040 Regular pay = $200; Deferral, vested = $20; Vesting of prior-year deferrals = $100; Vesting of investment earnings on $100 of prior-year deferral = $15. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 Deferral, vested) $180 Box 3 ($200 Regular pay plus $100 vested prior-year deferral plus $15 earnings on deferral) 315 Box 5 ($200 Regular pay plus $100 vested prior-year deferral plus $15 vested investment earnings on prior year deferral) 315 Box 11 ($100 vested prior-year deferral plus $15 earnings) 115 Example 4: No deferrals but there are distributions (no vesting of prior-year deferrals). 2012 tax forms 1040 For the year, the employee’s regular pay was $100, and the employee deferred no pay into the employer’s NQDC plan. 2012 tax forms 1040 There was no vesting of prior-year deferrals under the plan. 2012 tax forms 1040 During the year, there were total distributions of $50 from the plan to the employee. 2012 tax forms 1040 Regular pay = $100; Distribution = $50. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 ($100 Regular pay plus $50 Distribution) $150 Box 3 ($100 Regular pay ) 100 Box 5 ($100 Regular pay) 100 Box 11 ($50 Distribution) 50 Special rule for box 11 of Form W-2 (distributions and deferral in the same year). 2012 tax forms 1040   If, in the same year, there are NQDC distributions and there are deferrals that are reportable in boxes 3 and/or 5 (current or prior-year deferrals) of Form W-2, do not complete box 11. 2012 tax forms 1040 Instead, report on Form SSA-131 the total amount the employee earned during the year. 2012 tax forms 1040 * Submit the SSA-131 to the nearest SSA office or give it to the employee. 2012 tax forms 1040   *Generally, the amount earned by the employee during the tax year for purposes of item 6 of Form SSA-131 is the amount reported in box 1 of Form W-2 plus current-year deferrals that are vested (employee and employer portions) less distributions. 2012 tax forms 1040 Do not consider prior-year deferrals that are vesting in the current year. 2012 tax forms 1040 If there was a plan failure, the box 1 amount in this calculation should be as if there were no plan failure. 2012 tax forms 1040 Example 5: Deferral that is immediately vested and there are distributions (no vesting of prior-year deferrals). 2012 tax forms 1040 For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. 2012 tax forms 1040 There was also an employer match of $10. 2012 tax forms 1040 The deferral and employer match were vested upon deferral. 2012 tax forms 1040 There was no vesting of prior-year deferrals under the plan. 2012 tax forms 1040 During the year, there were total distributions of $50 from the plan to the employee. 2012 tax forms 1040 Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10; Distribution = $50. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 Deferral, vested) $230 Boxes 3 and 5 ($200 Regular pay plus $10 vested employer match) 210 Leave Box 11 blank. 2012 tax forms 1040 File Form SSA-131 -0-     Form SSA-131 Completion Item 6 - amount of wages earned by the employee during the tax year ($230 from Box 1 of Form W-2 minus $50 Distribution plus $30 vested current year employee deferral and employer match) $210 Example 6: Deferral with delayed vesting and there are distributions (no vesting of prior-year deferrals). 2012 tax forms 1040 For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. 2012 tax forms 1040 The deferral was not vested upon deferral. 2012 tax forms 1040 There was no vesting of prior-year deferrals under the plan. 2012 tax forms 1040 During the year, there were total distributions of $50 from the plan to the employee. 2012 tax forms 1040 Regular pay = $200; Deferral, not vested = $20; Distribution = $50. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 Deferral, not vested) $230 Boxes 3 and 5 ($200 Regular pay minus $20 deferral that is not vested) 180 Box 11 ($50 Distribution). 2012 tax forms 1040 50 Example 7: Deferral that is immediately vested and there are distributions (also vesting of prior-year deferrals and earnings on those prior-year deferrals). 2012 tax forms 1040 For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. 2012 tax forms 1040 The deferral was vested upon deferral. 2012 tax forms 1040 There was vesting of $100 of prior-year deferrals and $15 of earnings on the $100 prior-year deferral under the plan. 2012 tax forms 1040 During the year, there were total distributions of $50 from the plan to the employee. 2012 tax forms 1040 Regular pay = $200; Deferral, vested = $20; Distribution = $50; Vesting of prior-year deferrals ($100) and earnings on those prior-year deferrals ($15) = $115. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 vested deferral $230 Boxes 3 and 5 ($200 Regular pay Plus $115 vested prior deferral (with vested earnings on the deferral)) 315 Leave Box 11 blank. 2012 tax forms 1040 File Form SSA-131 -0-     Form SSA-131 Completion Item 6, amount of wages earned by the employee during the tax year ($230 from Box 1 of Form W-2 minus $50 Distribution plus $20 vested current year deferral) $200 Example 8: Deferral with delayed vesting and there are distributions (vesting of prior-year deferrals, including employer matches, and earnings on those deferrals). 2012 tax forms 1040 For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. 2012 tax forms 1040 The deferral was not vested upon deferral. 2012 tax forms 1040 There was also vesting of prior-year deferrals and employer matches and earnings on these amounts under the plan ($115). 2012 tax forms 1040 During the year, there were total distributions of $50 from the plan to the employee. 2012 tax forms 1040 Regular pay = $200; Deferral, not vested = $20; Distribution = $50; Vesting of prior-year deferrals and employer match = $100 plus earnings on that $100 of $15. 2012 tax forms 1040 Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 regular pay minus $20 Deferral, not vested) $230 Boxes 3 and 5 ($200 Regular pay plus $115 vested prior-year deferral and prior year employer match and earning on the prior year amounts minus $20 deferral that is not vested) 295 Leave Box 11 blank. 2012 tax forms 1040 File Form SSA-131 -0-     Form SSA-131 Completion Item 6 ($230 Amount from Box 1 of Form W-2 minus $50 Distribution) $180 Table 2. 2012 tax forms 1040 Specifications for Electronic Reporting of Special Wage Payments Record Position  Field Size   Description Start End 1 3 3 Record Type—must include only the capital letters “SWP” 4 12 9 SSN—must be numeric and may not be all zeros 13 27 15 Last Name—all capitals and no punctuation; may have blanks on right only 28 38 11 First Name—all capitals and no punctuation; may have blanks on right only 39 39 1 Middle Initial—must be either a capital letter or blank 40 48 9 EIN—must be numeric and may not be all zeros 49 59 11 Payment—must be numeric; may not be all zeros; last two digits on right are assumed to be cents; no period or dollar sign 60 63 4 Payment Year—must be only a four-digit year 64 66 3 SSA Office Code—must be numeric and may be all zeros 67 67 1 Payment Type Code—must be the capital letter “T” 68 117 50 Filler  The record format is a fixed length of 117. 2012 tax forms 1040  The file format is ASCII. 2012 tax forms 1040  Submit only one file at a time. 2012 tax forms 1040   Table 3. 2012 tax forms 1040 Sample—Paper Listing for Reporting Special Wage Payments to Several Employees Report of Special Wage PaymentsTax Year: Page of A. 2012 tax forms 1040 Employer Name: EIN:   Address: Contact Name:     Phone: ( )   . 2012 tax forms 1040 1) B. 2012 tax forms 1040 Employee Name: (Last) (First) (MI)   C. 2012 tax forms 1040 SSN: D. 2012 tax forms 1040 SWP:$ E. 2012 tax forms 1040 Type: Other: 2) B. 2012 tax forms 1040 Employee Name: (Last) (First) (MI)   C. 2012 tax forms 1040 SSN: D. 2012 tax forms 1040 SWP:$ E. 2012 tax forms 1040 Type: Other: 3) B. 2012 tax forms 1040 Employee Name: (Last) (First) (MI)   C. 2012 tax forms 1040 SSN: D. 2012 tax forms 1040 SWP:$ E. 2012 tax forms 1040 Type: Other: 4) B. 2012 tax forms 1040 Employee Name: (Last) (First) (MI)   C. 2012 tax forms 1040 SSN: D. 2012 tax forms 1040 SWP:$ E. 2012 tax forms 1040 Type: Other: 5) B. 2012 tax forms 1040 Employee Name: (Last) (First) (MI)   C. 2012 tax forms 1040 SSN: D. 2012 tax forms 1040 SWP:$ E. 2012 tax forms 1040 Type: Other:     INSTRUCTIONS:   Enter tax year and page number. 2012 tax forms 1040   A. 2012 tax forms 1040 Employer name, employer identification number (EIN), address, the name of a contact person, and a phone number where the contact person can be reached during normal business hours. 2012 tax forms 1040   B. 2012 tax forms 1040 Employee's name. 2012 tax forms 1040   C. 2012 tax forms 1040 Employee's social security number (SSN). 2012 tax forms 1040   D. 2012 tax forms 1040 Total amount of special wage payments made to the employee. 2012 tax forms 1040   E. 2012 tax forms 1040 Type of special wage payment from the following list: (1) Vacation Pay, (2) Sick Pay, (3) Severance Pay,  (4) Bonus, (5) Deferred Compensation, (6) Stock Options, and (7) Other—Please explain. 2012 tax forms 1040   Do not use a paper listing for nonqualified deferred compensation and section 457 plan deferrals and payments that could not be reported in block 11 of Form W-2. 2012 tax forms 1040 (Get Form SSA-131. 2012 tax forms 1040 )                 Prev  Up  Next   Home   More Online Publications