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Tax Amendments

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Tax Amendments

Tax amendments Index A Accident benefits, Accident and Health Benefits Achievement awards, Achievement Awards Additional Medicare Tax, Reminders, Additional Medicare Tax withholding. Tax amendments Adoption assistance, Adoption Assistance Annual lease value, Annual Lease Value Assistance (see Tax help) Athletic facilities, Athletic Facilities Automobile (see Vehicles) Awards, achievement, Achievement Awards B Bicycle commuting reimbursement, qualified, Qualified bicycle commuting reimbursement. Tax amendments C Cafeteria plans, Cafeteria Plans Cents-per-mile rule, What's New, Cents-Per-Mile Rule COBRA premiums, COBRA premiums. Tax amendments Comments on publication, Comments and suggestions. Tax amendments Commuter highway vehicle, Commuter highway vehicle. Tax amendments Commuting rule, Commuting Rule Copying machine use, De Minimis (Minimal) Benefits D Daily lease value, Daily Lease Value De minimis (minimal) benefits In general, De Minimis (Minimal) Benefits Meals, De Minimis Meals Transportation, De Minimis Transportation Benefits Demonstrator cars, Demonstrator cars. Tax amendments Dependent care assistance, Dependent Care Assistance Deposit rules, 4. Tax amendments Rules for Withholding, Depositing, and Reporting Discounts for employees, Employee Discounts E Educational assistance, Educational Assistance Employee benefit programs Accident and health benefits, Accident and Health Benefits Cafeteria plans, Cafeteria Plans Dependent care assistance, Dependent Care Assistance Educational assistance, Educational Assistance Group-term life insurance, Group-Term Life Insurance Coverage Employee discounts, Employee Discounts Employee stock options, Employee Stock Options Employer-operated eating facility, Employer-operated eating facility for employees. Tax amendments Employer-provided cell phones, Employer-Provided Cell Phones Exclusion rules, 2. Tax amendments Fringe Benefit Exclusion Rules F Fair market value, Fair market value. Tax amendments Fringe benefit overview, 1. Tax amendments Fringe Benefit Overview Fringe benefits Special accounting rule, Special accounting rule. Tax amendments Valuation rules, 3. Tax amendments Fringe Benefit Valuation Rules G General valuation rule, General Valuation Rule Group-term life insurance, Group-Term Life Insurance Coverage H Health benefits, Accident and Health Benefits Health Savings Accounts, Health Savings Accounts Holiday gifts, De Minimis (Minimal) Benefits I Insurance Accident and health, Accident and Health Benefits Group-term life, Group-Term Life Insurance Coverage Long-term care, Exception for certain long-term care benefits. Tax amendments L Lease value rule, Lease Value Rule Length of service awards, Achievement Awards Life insurance Group-term, Group-Term Life Insurance Coverage Spouse or dependent, De Minimis (Minimal) Benefits Lodging, Lodging on Your Business Premises Long-term care insurance, Exception for certain long-term care benefits. Tax amendments M Meals De minimis, De Minimis Meals On your business premises, Meals on Your Business Premises Medical reimbursement plans, Accident and Health Benefits Minimal benefits, De Minimis (Minimal) Benefits Moving expense reimbursements, Moving Expense Reimbursements N No-additional-cost services, No-Additional-Cost Services Nonpersonal use vehicles, qualified, Qualified nonpersonal use vehicles. Tax amendments O Options on stock, Employee Stock Options Outplacement services, Outplacement services. Tax amendments P Parking, qualified, Qualified parking. Tax amendments Parties, De Minimis (Minimal) Benefits Performance of services, Performance of services. Tax amendments Pickup trucks, Pickup trucks. Tax amendments Picnics, De Minimis (Minimal) Benefits Prorated annual lease value, Prorated Annual Lease Value Provider defined, Provider of benefit. Tax amendments Publications (see Tax help) Q Qualified transportation benefits, Qualified Transportation Benefits R Recipient defined, Recipient of benefit. Tax amendments Reimbursements, moving expense, Moving Expense Reimbursements Reporting rules, 4. Tax amendments Rules for Withholding, Depositing, and Reporting Retirement planning services, Retirement Planning Services S Safety achievement awards, Achievement Awards Self insurance (medical reimbursement plans), Accident and Health Benefits Services, no-additional-cost, No-Additional-Cost Services Simple Cafeteria Plans, Simple Cafeteria Plans Special accounting rule, Special accounting rule. Tax amendments Stock options, employee, Employee Stock Options Suggestions for publication, Comments and suggestions. Tax amendments T Tax help, How To Get Tax Help Taxable benefits, Are Fringe Benefits Taxable? Tickets for theater or sporting events, De Minimis (Minimal) Benefits Transit pass, Transit pass. Tax amendments Transportation benefits De minimis, De Minimis Transportation Benefits Qualified, Qualified Transportation Benefits TTY/TDD information, How To Get Tax Help Tuition reduction, Tuition Reduction U Unsafe conditions commuting rule, Unsafe Conditions Commuting Rule V Valuation rules, 3. Tax amendments Fringe Benefit Valuation Rules Vans, Vans. Tax amendments Vehicles Business use of (see Working condition benefits) Commuter highway, Commuter highway vehicle. Tax amendments Qualified nonpersonal use, Qualified nonpersonal use vehicles. Tax amendments Valuation of, Employer-provided vehicles. Tax amendments W Withholding rules, 4. Tax amendments Rules for Withholding, Depositing, and Reporting Working condition benefits, Working Condition Benefits Prev  Up     Home   More Online Publications
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IRS Nationwide Tax Forums Online

The IRS Nationwide Tax Forums Online (NTFO) provides information for tax professionals from the speakers at the IRS Nationwide Tax Forums. Each online, self-study seminar includes interactive video synchronized with a PowerPoint presentation, along downloadable slides and complete transcripts.
NTFO seminars may be taken for either continuing professional education (CPE) credit or audit. NTFO is registered with the Internal Revenue Service and the National Association of State Boards of Accountancy (NASBA) as an approved sponsor of continuing professional education for CPAs and EAs. No prerequisites are required before taking the seminars on the NTFO website.
NTFO seminars allow its users to learn at their own pace, any time of day, from any location. The seminars are broken into chapters for easier viewing. To earn credit for a seminar, create an NTFO account and purchase the seminar, answer review questions at the end of each chapter, and pass a short, multiple-choice final examination. The seminar may be viewed repeatedly; however, the final examination can only be attempted two times. After passing the final examination, the user can immediately print the certificate of completion.
NTFO offers seminars from the 2009 through 2013 IRS Nationwide Tax Forums (some seminars are only available for audit).

IR-2013-89: Seminars from the 2013 Forums Now Available at IRS Nationwide Tax Forums Online

2013 NTFO Seminars

  • 2013 New Roth Conversion Opportunities & Other Retirement Curveballs
  • Automated Underreporter (AUR) and Correspondence Examinations
  • Collection Alternatives for your Small Business Clients
  •  The Collection Appeal Program (CAP):  Do you know what to expect during a CAP Appeal?
  • Doing the Right Thing: TIGTA, Integrity and You
  • Getting the Most out of Child-Related Tax Benefits
  • Grab the Money and Run? Retirement Plan Loans and Hardship Distributions
  • ITINs and Filing a Tax Return: Advocating for your Client during the ITIN Application Process
  • The New Form 706
  • Overview of 2013 Income Tax Changes
  • An Overview of Circular 230 and the Office of Professional Responsibility (OPR) for New Tax Professionals
  • Post Appeals Mediation (PAM): Do you know what to expect during PAM?
  • Return Preparer Fraud: Remedies for the Taxpayer
  • What Every Tax Return Preparer Needs to Know: Key Circular 230 Provisions

For more information, visit IRS Nationwide Tax Forums Online.

Page Last Reviewed or Updated: 08-Nov-2013

The Tax Amendments

Tax amendments Publication 957 - Main Content Table of Contents 1. Tax amendments What is Back Pay?Reporting Back Pay Back Pay Under a Statute Nonstatutory Back Pay Format for Report to the SSA Questions 2. Tax amendments 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). Tax amendments 1. Tax amendments 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). Tax amendments 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. Tax amendments Damages for personal injury, interest, penalties, and legal fees included with back pay awards are not wages. Tax amendments Report all back pay. Tax amendments 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. Tax amendments See Back Pay Under a Statute , later, for more information. Tax amendments Reporting Back Pay The Internal Revenue Service (IRS) and the SSA consider back pay awards to be wages. Tax amendments However, for income tax purposes, the IRS treats all back pay as wages in the year paid. Tax amendments 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. Tax amendments The SSA no longer accepts reports on tapes, cartridges, and diskettes. Tax amendments Example. Tax amendments In 2012, Terry Morris earned wages of $50,000. Tax amendments 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. Tax amendments Her employer properly reflected social security wages of $110,100 and Medicare wages of $150,000 on her 2012 Form W-2. Tax amendments 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. Tax amendments Example. Tax amendments 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. Tax amendments 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. Tax amendments SSA treatment of back pay under a statute. Tax amendments   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. Tax amendments 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. Tax amendments   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. Tax amendments Then, the SSA can allocate the statutory back pay to the appropriate periods. Tax amendments   If a back pay award is not made under a statute, the SSA credits back pay as wages in the year paid. Tax amendments    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. Tax amendments    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. Tax amendments No further action is necessary. Tax amendments Example. Tax amendments 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. Tax amendments Her employer properly reported wages of $32,000 for social security and Medicare on her 2012 Form W-2. Tax amendments No further action is necessary. Tax amendments Information the SSA needs to properly credit back pay under a statute (special report). Tax amendments   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. Tax amendments There is no statute of limitations on the filing of the special report to enable the SSA to allocate the wages. Tax amendments The special report must include the following information. Tax amendments The employer's name, address, and employer identification number (EIN). Tax amendments A signed statement citing the federal or state statute under which the payment was made. Tax amendments 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). Tax amendments The name and telephone number of a person to contact. Tax amendments The SSA may have additional questions concerning the back pay case or the individual employee's information. Tax amendments A list of employees receiving the payment and the following information for each employee: The tax year you paid and reported the back pay. Tax amendments The employee's social security number (SSN). Tax amendments The employee's name (as shown on his or her social security card). Tax amendments The amount of the back pay award excluding any amounts specifically designated otherwise, for example, damages for personal injury, interest, penalties, and legal fees. Tax amendments The period(s) the back pay award covers (beginning and ending dates—month and year). Tax amendments 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)*. Tax amendments Do not include the back pay award shown in that wage report. Tax amendments 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. Tax amendments The amount to allocate to each reporting period*. Tax amendments This includes any amount you want allocated (if applicable) to the tax year of the award payment. Tax amendments 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. Tax amendments *Note. Tax amendments   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. Tax amendments For all tax years, show and identify the social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) separately. Tax amendments MQGE is applicable to federal employees beginning in 1983, and for certain state and local government employees beginning in 1986. Tax amendments For tax years 1991 and later, list the social security and Medicare wages separately. Tax amendments 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. Tax amendments 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. Tax amendments 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. Tax amendments Payments based on laws that have a similar effect to those listed above also may qualify as payments made under a statute. Tax amendments Back pay awards, under some of the statutes listed above, may be compensation for personal injury and not pay for employment. Tax amendments Such awards are not wages for social security coverage purposes. Tax amendments 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. Tax amendments The payments made in such a settlement may still be back pay and wages under the rules discussed here. Tax amendments 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. Tax amendments Delayed wage payments and retroactive pay increases resulting from union negotiation or payments under local ordinances or regulations are back pay and are wages. Tax amendments However, they are not payments made under a statute. Tax amendments 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. Tax amendments 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. Tax amendments 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. Tax amendments Under certain circumstances, back pay may be a special wage payment and excluded from wages counted under the social security earnings test. Tax amendments If you pay back pay to an employee age 61 or older, report it to the SSA in accordance with this section. Tax amendments Read Special Wage Payments, later, for additional reporting instructions. Tax amendments Questions If you have questions concerning back pay under a statute, call the SSA at 1-800-772-6270. Tax amendments Exception. Tax amendments   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. Tax amendments Table 1. Tax amendments 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. Tax amendments Sec. Tax amendments /Med. Tax amendments Wages Paid In Award Year (4)3 Allocation     Soc. Tax amendments Sec. Tax amendments Med. Tax amendments /MQGE Year Soc. Tax amendments Sec. Tax amendments Med. Tax amendments /MQGE xxx-xx-xxxx HELEN T. Tax amendments 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. Tax amendments EVANS 30,000 7/89-12/91 -0- -0- 1989 1990 1991   6,000 12,000 12,000 xxx-xx-xxxx ROLAND S. Tax amendments 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. Tax amendments  2Exclude the amount of back pay, if any, included in that amount. Tax amendments  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. Tax amendments The social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) must be shown separately FOR ALL YEARS. Tax amendments (Wages subject ONLY to MQGE would be shown in the Medicare/MQGE column; no wages would be shown in the Soc. Tax amendments Sec. Tax amendments column. Tax amendments ) For tax years 1991 and later, the social security and Medicare wages must be listed separately. Tax amendments Explanation of examples. Tax amendments Helen T. Tax amendments Smith–The back pay award, excluding interest, was $100,000 for the periods 1/2009-12/2012. Tax amendments In 2012, this employee was also paid $40,000 in other wages. Tax amendments (Her Form W-2 for 2012 reported $110,100 for social security and $140,000 for Medicare. Tax amendments The SSA allocation will result in adjusted posted wages of $68,000 for social security and $68,000 for Medicare for 2012. Tax amendments ) Sam W. Tax amendments Evans–The back pay award was $30,000 for the periods 7/89-12/91. Tax amendments This employee was hired in 1989 and was subject to MQGE only. Tax amendments He was no longer employed by this governmental employer in 2012. Tax amendments (His Form W-2 for 2012 reported $30,000 for social security and $30,000 for Medicare. Tax amendments After the SSA allocation, he will not have any net posted wages for 2012. Tax amendments ) Roland S. Tax amendments Adams–The back pay award was $15,000 for the periods 7/80-12/81. Tax amendments He was no longer employed by this state and local government (Section 218) employer in 2012. Tax amendments (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. Tax amendments ) 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. Tax amendments 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. Tax amendments Employers should report to the SSA special wage payments made to employees and former employees who are recipients of social security retirement benefits. Tax amendments 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. Tax amendments 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. Tax amendments Note. Tax amendments Payments made after retirement that are part of the normal payroll cycle should not be routinely reported as special wage payments. Tax amendments Earnings Test. Tax amendments   Benefits paid to a social security beneficiary under full retirement age may be reduced if the beneficiary continues to work. Tax amendments The SSA uses the information in boxes 1, 3, and 5 of Form W-2 to determine the beneficiary's current year earnings. Tax amendments 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. Tax amendments 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. Tax amendments Therefore, employer reports of special wage payments help prevent incorrect benefit reductions. Tax amendments Reporting Special Wage Payments Employers must report special wage payments for income tax purposes and social security and Medicare taxes in the year received. Tax amendments Report income, social security, and/or Medicare taxes for special wage payments on Form W-2. Tax amendments See Nonqualified Deferred Compensation and Section 457 Plans, later, for reporting nonqualified deferred compensation plan deferrals and payments on Form W-2. Tax amendments 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. Tax amendments Submit reports after the close of the tax year. Tax amendments To avoid delays in processing, submit reports in time to reach the SSA by April 1. Tax amendments Use one of the following reporting methods. Tax amendments Electronic reporting. Tax amendments   Special wage payment files can be sent electronically by logging onto Business Services Online (BSO) via the socialsecurity. Tax amendments gov website. Tax amendments BSO enables organizations and authorized individuals to conduct business with and submit confidential information to the Social Security Administration. Tax amendments You must register to use this website. Tax amendments The web address is www. Tax amendments socialsecurity. Tax amendments gov/bso/bsowelcome. Tax amendments htm. Tax amendments   Use the specifications and record layout shown in  Table 2, later. Tax amendments Only one file at a time may be submitted. Tax amendments If your file is large (>10MB), or you have a slow internet connection, the transmission will be faster if the file is zipped. Tax amendments A zipped file contains a file that has been compressed to reduce its file size. Tax amendments WinZip and PKZIP are examples of acceptable compression packages. Tax amendments   Electronic submissions not meeting the specifications in Table 2 will be rejected. Tax amendments Paper listing. Tax amendments   A paper listing can be used to report special wage payments to several employees. Tax amendments Use the format shown in Table 3, later. Tax amendments Submit paper listings to the local SSA office nearest your place of business. Tax amendments Visit www. Tax amendments socialsecurity. Tax amendments gov/locator to find a Social Security office near you. Tax amendments Form SSA-131. Tax amendments   Use Form SSA-131 to report special wage payments made to an employee. Tax amendments 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. Tax amendments    This image is too large to be displayed in the current screen. Tax amendments Please click the link to view the image. Tax amendments Publication 957 Reporting Back Pay to the Social Security Administration Instructions for Form SSA–131   EMPLOYER INSTRUCTIONS FOR COMPLETING SPECIAL WAGE PAYMENT FORM 1. Tax amendments Provide the EIN that was used or will be used to report the employee's wages on the Form W-2. Tax amendments 2. Tax amendments Enter the date the employee retired. Tax amendments Enter “Not Retired” if the employee has not retired. Tax amendments 3. Tax amendments 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. Tax amendments This date should be the same as or earlier than the date in item “2”. Tax amendments Enter “Not Retired” if the employee has not retired. Tax amendments 4. Tax amendments 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. Tax amendments  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. Tax amendments Accumulated sick payments which were paid in a lump sum based on “retirement” as the sole condition of payment. Tax amendments Accumulated sick payments paid at or after the date in item 3, which were earned in a year prior to the tax year. Tax amendments Payments “on account of retirement”–dismissal, severance or termination pay paid because of retirement. Tax amendments 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. Tax amendments Stock Options. Tax amendments   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”). Tax amendments That were reported or will be reported under “Nonqualified Plans” on the Form W-2. Tax amendments That were deducted from the employee's wages and paid to a deferred compensation plan (e. Tax amendments g. Tax amendments , 401k). Tax amendments Employees health and dental plan benefits (non-covered/non-taxable for Social Security Wages). Tax amendments Bonuses earned and paid in the tax year. Tax amendments 5. Tax amendments Check whether payments listed in item 4 will be made for years after the tax year. Tax amendments If yes, please show the amounts and years in which these will be paid, if known. Tax amendments 6. Tax amendments Nonqualified deferred compensation and section 457 plans only. Tax amendments 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. Tax amendments 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). Tax amendments Paperwork/Privacy Act Notice: This report is authorized by regulation 20 CFR 404. Tax amendments 702. Tax amendments 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. Tax amendments 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. Tax amendments We may also use the information you give us when we match records by computer. Tax amendments Matching programs compare our records with those of other Federal, State, or local government agencies. Tax amendments Many agencies may use matching programs to find or prove that a person qualifies for benefits paid by the Federal Government. Tax amendments The law allows us to do this even if you do not agree to it. Tax amendments Explanations about these and other reasons why information you provide us may be used or given out are available in Social Security Offices. Tax amendments If you want to learn more about this, contact any Social Security Office. Tax amendments The Paperwork Reduction Act: This information collection meets the clearance requirements of 44 U. Tax amendments S. Tax amendments C. Tax amendments §3507, as amended by Section 2 of the Paperwork Reduction Act of 1995. Tax amendments You are not required to answer these questions unless we display a valid Office of Management and Budget control number. Tax amendments We estimate that it will take you about 20 minutes to read the instructions, gather the necessary facts, and answer the questions. Tax amendments Form SSA-131 (8-2001) EF (06-2002)   Submit Form SSA-131 to the SSA office nearest your place of business. Tax amendments Or, the employee can submit it to the SSA office handling the claim. Tax amendments You or the employee must submit this form before the SSA can exclude the special wage payments for purposes of the earnings test. Tax amendments 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. Tax amendments Do not report payments from nonqualified deferred compensation or section 457 plans that were reported in box 11 of Form W-2. Tax amendments Use Form SSA-131 if deferrals to and payments from nonqualified or section 457 plans occurred during the tax year. Tax amendments 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. Tax amendments It should not count for the social security earnings test. Tax amendments 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. Tax amendments 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. Tax amendments 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. Tax amendments Nonqualified and section 457 plans are reported differently than other special wage payments. Tax amendments See Reporting Amounts Deferred to Nonqualified and Section 457 Plans below for specific instructions. Tax amendments 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. Tax amendments 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. Tax amendments The plans' deferrals, or contributions, are not subject to social security and Medicare taxes until the period of substantial risk of forfeiture ends. Tax amendments No risk of forfeiture. Tax amendments   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. Tax amendments Example. Tax amendments Company X's nonqualified deferred compensation plan allows the deferral of up to $20,000 of employee salaries each year. Tax amendments The plan has no risk of forfeiture. Tax amendments In 2012, Employee A defers $20,000 to the plan from a total salary of $200,000. Tax amendments 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. Tax amendments   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. Tax amendments The accumulated deferrals are reported along with any other social security and Medicare wages earned during the year. Tax amendments   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. Tax amendments If the employee continues working, future deferrals are social security and Medicare wages when they are earned. Tax amendments    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. Tax amendments Risk of forfeiture lapses at retirement. Tax amendments   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. Tax amendments 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. Tax amendments   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. Tax amendments    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. Tax amendments Example—risk of forfeiture. Tax amendments 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. Tax amendments B's wages, including this year's deferred amount, are $80,000. Tax amendments 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. Tax amendments 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. Tax amendments Example. Tax amendments Employee D retired from the XYZ company and began receiving social security benefits. Tax amendments 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. Tax amendments In addition, D agreed to continue performing services for XYZ, but on a part-time basis for wages of $15,000 per year. Tax amendments D made no deferrals to the nonqualified plan this year. Tax amendments 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. Tax amendments For more information, see Reporting Special Wage Payments , earlier. Tax amendments 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). Tax amendments Report to the SSA on Form SSA-131 the total amount the employee earned during the tax year. Tax amendments 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. Tax amendments See Form SSA-131 and its instructions, earlier. Tax amendments Example. Tax amendments Employee K retired this year from Company XYZ and began receiving social security benefits. Tax amendments During the year he earned wages of $50,000 and deferred $35,000 of the wages into the company's nonqualified deferred compensation plan. Tax amendments K also received $75,000 in payments from the company's nonqualified plan. Tax amendments 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. Tax amendments 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. Tax amendments If you report section 409A deferrals, show the amount in box 12 of Form W-2 using code Y. Tax amendments For more information, see Notice 2008-115, 2008-52 I. Tax amendments R. Tax amendments B. Tax amendments 1367, available at www. Tax amendments irs. Tax amendments gov/irb/2008-52_IRB/ar10. Tax amendments html. Tax amendments Special reporting rules apply when an NQDC plan is not compliant with section 409A (when there has been a “plan failure”). Tax amendments Income included under section 409A from an NQDC plan is reported in box 1 and box 12 of Form W-2 using code Z. Tax amendments See Notice 2008-115. Tax amendments The following examples use small dollar amounts for illustrative purposes. Tax amendments 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). Tax amendments The term “vested” in the following examples means that the amount deferred is not subject to a substantial risk of forfeiture. Tax amendments Conversely, the term “not vested” means that the amount deferred is subject to a substantial risk of forfeiture. Tax amendments 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. Tax amendments 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. Tax amendments Example 1: Deferral that is immediately vested (no substantial risk of forfeiture) with no distributions and no vesting of prior-year deferrals. Tax amendments For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into her employer’s NQDC plan. Tax amendments The deferral of $20 was vested upon deferral and there was an employer match of $10 under the plan, which was also vested. Tax amendments Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10. Tax amendments 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). Tax amendments 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. Tax amendments 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. Tax amendments Regular pay = $200; Deferral, not vested = $20; Employer match, not vested = $10. Tax amendments 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). Tax amendments 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. Tax amendments The deferral of $20 was vested upon deferral. Tax amendments During the year, $100 of prior-year deferrals and $15 of investment earnings on the $100 of prior-year deferrals became vested. Tax amendments Regular pay = $200; Deferral, vested = $20; Vesting of prior-year deferrals = $100; Vesting of investment earnings on $100 of prior-year deferral = $15. Tax amendments 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). Tax amendments For the year, the employee’s regular pay was $100, and the employee deferred no pay into the employer’s NQDC plan. Tax amendments There was no vesting of prior-year deferrals under the plan. Tax amendments During the year, there were total distributions of $50 from the plan to the employee. Tax amendments Regular pay = $100; Distribution = $50. Tax amendments 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). Tax amendments   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. Tax amendments Instead, report on Form SSA-131 the total amount the employee earned during the year. Tax amendments * Submit the SSA-131 to the nearest SSA office or give it to the employee. Tax amendments   *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. Tax amendments Do not consider prior-year deferrals that are vesting in the current year. Tax amendments If there was a plan failure, the box 1 amount in this calculation should be as if there were no plan failure. Tax amendments Example 5: Deferral that is immediately vested and there are distributions (no vesting of prior-year deferrals). Tax amendments For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Tax amendments There was also an employer match of $10. Tax amendments The deferral and employer match were vested upon deferral. Tax amendments There was no vesting of prior-year deferrals under the plan. Tax amendments During the year, there were total distributions of $50 from the plan to the employee. Tax amendments Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10; Distribution = $50. Tax amendments 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. Tax amendments 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). Tax amendments For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Tax amendments The deferral was not vested upon deferral. Tax amendments There was no vesting of prior-year deferrals under the plan. Tax amendments During the year, there were total distributions of $50 from the plan to the employee. Tax amendments Regular pay = $200; Deferral, not vested = $20; Distribution = $50. Tax amendments 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). Tax amendments 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). Tax amendments For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Tax amendments The deferral was vested upon deferral. Tax amendments There was vesting of $100 of prior-year deferrals and $15 of earnings on the $100 prior-year deferral under the plan. Tax amendments During the year, there were total distributions of $50 from the plan to the employee. Tax amendments Regular pay = $200; Deferral, vested = $20; Distribution = $50; Vesting of prior-year deferrals ($100) and earnings on those prior-year deferrals ($15) = $115. Tax amendments 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. Tax amendments 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). Tax amendments For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Tax amendments The deferral was not vested upon deferral. Tax amendments There was also vesting of prior-year deferrals and employer matches and earnings on these amounts under the plan ($115). Tax amendments During the year, there were total distributions of $50 from the plan to the employee. Tax amendments 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. Tax amendments 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. Tax amendments File Form SSA-131 -0-     Form SSA-131 Completion Item 6 ($230 Amount from Box 1 of Form W-2 minus $50 Distribution) $180 Table 2. Tax amendments Specifications for Electronic Reporting of Special Wage Payments Record Position  Field Size   Description Start End 1 3 3 Record Type—must include only the capital letters “SWP” 4 12 9 SSN—must be numeric and may not be all zeros 13 27 15 Last Name—all capitals and no punctuation; may have blanks on right only 28 38 11 First Name—all capitals and no punctuation; may have blanks on right only 39 39 1 Middle Initial—must be either a capital letter or blank 40 48 9 EIN—must be numeric and may not be all zeros 49 59 11 Payment—must be numeric; may not be all zeros; last two digits on right are assumed to be cents; no period or dollar sign 60 63 4 Payment Year—must be only a four-digit year 64 66 3 SSA Office Code—must be numeric and may be all zeros 67 67 1 Payment Type Code—must be the capital letter “T” 68 117 50 Filler  The record format is a fixed length of 117. Tax amendments  The file format is ASCII. Tax amendments  Submit only one file at a time. Tax amendments   Table 3. Tax amendments Sample—Paper Listing for Reporting Special Wage Payments to Several Employees Report of Special Wage PaymentsTax Year: Page of A. Tax amendments Employer Name: EIN:   Address: Contact Name:     Phone: ( )   . Tax amendments 1) B. Tax amendments Employee Name: (Last) (First) (MI)   C. Tax amendments SSN: D. Tax amendments SWP:$ E. Tax amendments Type: Other: 2) B. Tax amendments Employee Name: (Last) (First) (MI)   C. Tax amendments SSN: D. Tax amendments SWP:$ E. Tax amendments Type: Other: 3) B. Tax amendments Employee Name: (Last) (First) (MI)   C. Tax amendments SSN: D. Tax amendments SWP:$ E. Tax amendments Type: Other: 4) B. Tax amendments Employee Name: (Last) (First) (MI)   C. Tax amendments SSN: D. Tax amendments SWP:$ E. Tax amendments Type: Other: 5) B. Tax amendments Employee Name: (Last) (First) (MI)   C. Tax amendments SSN: D. Tax amendments SWP:$ E. Tax amendments Type: Other:     INSTRUCTIONS:   Enter tax year and page number. Tax amendments   A. Tax amendments 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. Tax amendments   B. Tax amendments Employee's name. Tax amendments   C. Tax amendments Employee's social security number (SSN). Tax amendments   D. Tax amendments Total amount of special wage payments made to the employee. Tax amendments   E. Tax amendments 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. Tax amendments   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. Tax amendments (Get Form SSA-131. Tax amendments )                 Prev  Up  Next   Home   More Online Publications