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Federal Income Tax Forms

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Federal Income Tax Forms

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

Federal income tax forms 10. Federal income tax forms   Retirement Savings Contributions Credit (Saver's Credit) Table of Contents Full-time student. Federal income tax forms Adjusted gross income. Federal income tax forms Distributions received by spouse. Federal income tax forms Testing period. Federal income tax forms If you or your employer make eligible contributions (defined later) to a retirement plan, you may be able to take a credit of up to $1,000 (up to $2,000 if filing jointly). Federal income tax forms This credit could reduce the federal income tax you pay dollar for dollar. Federal income tax forms Can you claim the credit?   If you or your employer make eligible contributions to a retirement plan, you can claim the credit if all of the following apply. Federal income tax forms You are not under age 18. Federal income tax forms You are not a full-time student (explained next). Federal income tax forms No one else, such as your parent(s), claims an exemption for you on their tax return. Federal income tax forms Your adjusted gross income (defined later) is not more than: $59,000 for 2013 ($60,000 for 2014) if your filing status is married filing jointly, $44,250 for 2013 ($45,000 for 2014) if your filing status is head of household (with qualifying person), or $29,500 for 2013 ($30,000 for 2014) if your filing status is single, married filing separately, or qualifying widow(er) with dependent child. Federal income tax forms Full-time student. Federal income tax forms   You are a full-time student if, during some part of each of 5 calendar months (not necessarily consecutive) during the calendar year, you are either: A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or A student taking a full-time, on-farm training course given by either a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or a state, county, or local government. Federal income tax forms You are a full-time student if you are enrolled for the number of hours or courses the school considers to be full-time. Federal income tax forms Adjusted gross income. Federal income tax forms   This is generally the amount on line 38 of your 2013 Form 1040 or line 22 of your 2013 Form 1040A. Federal income tax forms However, you must add to that amount any exclusion or deduction claimed for the year for: Foreign earned income, Foreign housing costs, Income for bona fide residents of American Samoa, and Income from Puerto Rico. Federal income tax forms Eligible contributions. Federal income tax forms   These include: Contributions to a traditional or Roth IRA, Elective deferrals, including amounts designated as after-tax Roth contributions, to: A 401(k) plan (including a SIMPLE 401(k)), A section 403(b) annuity, An eligible deferred compensation plan of a state or local government (a governmental 457 plan), A SIMPLE IRA plan, or A salary reduction SEP, and Contributions to a section 501(c)(18) plan. Federal income tax forms They also include voluntary after-tax employee contributions to a tax-qualified retirement plan or a section 403(b) annuity. Federal income tax forms For purposes of the credit, an employee contribution will be voluntary as long as it is not required as a condition of employment. Federal income tax forms Reducing eligible contributions. Federal income tax forms   Reduce your eligible contributions (but not below zero) by the total distributions you received during the testing period (defined later) from any IRA, plan, or annuity included earlier under Eligible contributions. Federal income tax forms Also reduce your eligible contributions by any distribution from a Roth IRA that is not rolled over, even if the distribution is not taxable. Federal income tax forms      Do not reduce your eligible contributions by any of the following: The portion of any distribution which is not includible in income because it is a trustee-to-trustee transfer or a rollover distribution. Federal income tax forms Any distribution that is a return of a contribution to an IRA (including a Roth IRA) made during the year for which you claim the credit if: The distribution is made before the due date (including extensions) of your tax return for that year, You do not take a deduction for the contribution, and The distribution includes any income attributable to the contribution. Federal income tax forms Loans from a qualified employer plan treated as a distribution. Federal income tax forms Distributions of excess contributions or deferrals (and income attributable to excess contributions and deferrals). Federal income tax forms Distributions of dividends paid on stock held by an employee stock ownership plan under section 404(k). Federal income tax forms Distributions from an eligible retirement plan that are converted or rolled over to a Roth IRA. Federal income tax forms Distributions from a military retirement plan. Federal income tax forms Distributions received by spouse. Federal income tax forms   Any distributions your spouse receives are treated as received by you if you file a joint return with your spouse both for the year of the distribution and for the year for which you claim the credit. Federal income tax forms Testing period. Federal income tax forms   The testing period consists of: The year in which you claim the credit, The 2 years before the year in which you claim the credit, and The period after the end of the year in which you claim the credit and before the due date of the return (including extensions) for filing your return for the year in which you claimed the credit. Federal income tax forms Example. Federal income tax forms You and your spouse filed joint returns in 2011 and 2012, and plan to do so in 2013 and 2014. Federal income tax forms You received a taxable distribution from a qualified plan in 2011 and a taxable distribution from an eligible section 457(b) deferred compensation plan in 2012. Federal income tax forms Your spouse received taxable distributions from a Roth IRA in 2013 and tax-free distributions from a Roth IRA in 2014 before April 15. Federal income tax forms You made eligible contributions to an IRA in 2013 and you otherwise qualify for this credit. Federal income tax forms You must reduce the amount of your qualifying contributions in 2013 by the total of the distributions you and your spouse received in 2011, 2012, 2013, and 2014. Federal income tax forms Maximum eligible contributions. Federal income tax forms   After your contributions are reduced, the maximum annual contribution on which you can base the credit is $2,000 per person. Federal income tax forms Effect on other credits. Federal income tax forms   The amount of this credit will not change the amount of your refundable tax credits. Federal income tax forms A refundable tax credit, such as the earned income credit or the additional child tax credit, is an amount that you would receive as a refund even if you did not otherwise owe any taxes. Federal income tax forms Maximum credit. Federal income tax forms   This is a nonrefundable credit. Federal income tax forms The amount of the credit in any year cannot be more than the amount of tax that you would otherwise pay (not counting any refundable credits or the adoption credit) in any year. Federal income tax forms If your tax liability is reduced to zero because of other nonrefundable credits, such as the education credits, then you will not be entitled to this credit. Federal income tax forms How to figure and report the credit. Federal income tax forms   The amount of the credit you can get is based on the contributions you make and your credit rate. Federal income tax forms The credit rate can be as low as 10% or as high as 50%. Federal income tax forms Your credit rate depends on your income and your filing status. Federal income tax forms See Form 8880, Credit for Qualified Retirement Savings Contributions, to determine your credit rate. Federal income tax forms   The maximum contribution taken into account is $2,000 per person. Federal income tax forms On a joint return, up to $2,000 is taken into account for each spouse. Federal income tax forms   Figure the credit on Form 8880. Federal income tax forms Report the credit on line 50 of your Form 1040 or line 32 of your Form 1040A, and attach Form 8880 to your return. Federal income tax forms Prev  Up  Next   Home   More Online Publications