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When To File 1040x

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When To File 1040x

When to file 1040x Publication 957 - Main Content Table of Contents 1. When to file 1040x What is Back Pay?Reporting Back Pay Back Pay Under a Statute Nonstatutory Back Pay Format for Report to the SSA Questions 2. When to file 1040x 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). When to file 1040x 1. When to file 1040x 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). When to file 1040x 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. When to file 1040x Damages for personal injury, interest, penalties, and legal fees included with back pay awards are not wages. When to file 1040x Report all back pay. When to file 1040x 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. When to file 1040x See Back Pay Under a Statute , later, for more information. When to file 1040x Reporting Back Pay The Internal Revenue Service (IRS) and the SSA consider back pay awards to be wages. When to file 1040x However, for income tax purposes, the IRS treats all back pay as wages in the year paid. When to file 1040x 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. When to file 1040x The SSA no longer accepts reports on tapes, cartridges, and diskettes. When to file 1040x Example. When to file 1040x In 2012, Terry Morris earned wages of $50,000. When to file 1040x 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. When to file 1040x Her employer properly reflected social security wages of $110,100 and Medicare wages of $150,000 on her 2012 Form W-2. When to file 1040x 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. When to file 1040x Example. When to file 1040x 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. When to file 1040x 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. When to file 1040x SSA treatment of back pay under a statute. When to file 1040x   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. When to file 1040x 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. When to file 1040x   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. When to file 1040x Then, the SSA can allocate the statutory back pay to the appropriate periods. When to file 1040x   If a back pay award is not made under a statute, the SSA credits back pay as wages in the year paid. When to file 1040x    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. When to file 1040x    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. When to file 1040x No further action is necessary. When to file 1040x Example. When to file 1040x 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. When to file 1040x Her employer properly reported wages of $32,000 for social security and Medicare on her 2012 Form W-2. When to file 1040x No further action is necessary. When to file 1040x Information the SSA needs to properly credit back pay under a statute (special report). When to file 1040x   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. When to file 1040x There is no statute of limitations on the filing of the special report to enable the SSA to allocate the wages. When to file 1040x The special report must include the following information. When to file 1040x The employer's name, address, and employer identification number (EIN). When to file 1040x A signed statement citing the federal or state statute under which the payment was made. When to file 1040x 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). When to file 1040x The name and telephone number of a person to contact. When to file 1040x The SSA may have additional questions concerning the back pay case or the individual employee's information. When to file 1040x A list of employees receiving the payment and the following information for each employee: The tax year you paid and reported the back pay. When to file 1040x The employee's social security number (SSN). When to file 1040x The employee's name (as shown on his or her social security card). When to file 1040x The amount of the back pay award excluding any amounts specifically designated otherwise, for example, damages for personal injury, interest, penalties, and legal fees. When to file 1040x The period(s) the back pay award covers (beginning and ending dates—month and year). When to file 1040x 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)*. When to file 1040x Do not include the back pay award shown in that wage report. When to file 1040x 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. When to file 1040x The amount to allocate to each reporting period*. When to file 1040x This includes any amount you want allocated (if applicable) to the tax year of the award payment. When to file 1040x 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. When to file 1040x *Note. When to file 1040x   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. When to file 1040x For all tax years, show and identify the social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) separately. When to file 1040x MQGE is applicable to federal employees beginning in 1983, and for certain state and local government employees beginning in 1986. When to file 1040x For tax years 1991 and later, list the social security and Medicare wages separately. When to file 1040x 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. When to file 1040x 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. When to file 1040x 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. When to file 1040x Payments based on laws that have a similar effect to those listed above also may qualify as payments made under a statute. When to file 1040x Back pay awards, under some of the statutes listed above, may be compensation for personal injury and not pay for employment. When to file 1040x Such awards are not wages for social security coverage purposes. When to file 1040x 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. When to file 1040x The payments made in such a settlement may still be back pay and wages under the rules discussed here. When to file 1040x 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. When to file 1040x Delayed wage payments and retroactive pay increases resulting from union negotiation or payments under local ordinances or regulations are back pay and are wages. When to file 1040x However, they are not payments made under a statute. When to file 1040x 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. When to file 1040x 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. When to file 1040x 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. When to file 1040x Under certain circumstances, back pay may be a special wage payment and excluded from wages counted under the social security earnings test. When to file 1040x If you pay back pay to an employee age 61 or older, report it to the SSA in accordance with this section. When to file 1040x Read Special Wage Payments, later, for additional reporting instructions. When to file 1040x Questions If you have questions concerning back pay under a statute, call the SSA at 1-800-772-6270. When to file 1040x Exception. When to file 1040x   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. When to file 1040x Table 1. When to file 1040x 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. When to file 1040x Sec. When to file 1040x /Med. When to file 1040x Wages Paid In Award Year (4)3 Allocation     Soc. When to file 1040x Sec. When to file 1040x Med. When to file 1040x /MQGE Year Soc. When to file 1040x Sec. When to file 1040x Med. When to file 1040x /MQGE xxx-xx-xxxx HELEN T. When to file 1040x 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. When to file 1040x EVANS 30,000 7/89-12/91 -0- -0- 1989 1990 1991   6,000 12,000 12,000 xxx-xx-xxxx ROLAND S. When to file 1040x 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. When to file 1040x  2Exclude the amount of back pay, if any, included in that amount. When to file 1040x  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. When to file 1040x The social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) must be shown separately FOR ALL YEARS. When to file 1040x (Wages subject ONLY to MQGE would be shown in the Medicare/MQGE column; no wages would be shown in the Soc. When to file 1040x Sec. When to file 1040x column. When to file 1040x ) For tax years 1991 and later, the social security and Medicare wages must be listed separately. When to file 1040x Explanation of examples. When to file 1040x Helen T. When to file 1040x Smith–The back pay award, excluding interest, was $100,000 for the periods 1/2009-12/2012. When to file 1040x In 2012, this employee was also paid $40,000 in other wages. When to file 1040x (Her Form W-2 for 2012 reported $110,100 for social security and $140,000 for Medicare. When to file 1040x The SSA allocation will result in adjusted posted wages of $68,000 for social security and $68,000 for Medicare for 2012. When to file 1040x ) Sam W. When to file 1040x Evans–The back pay award was $30,000 for the periods 7/89-12/91. When to file 1040x This employee was hired in 1989 and was subject to MQGE only. When to file 1040x He was no longer employed by this governmental employer in 2012. When to file 1040x (His Form W-2 for 2012 reported $30,000 for social security and $30,000 for Medicare. When to file 1040x After the SSA allocation, he will not have any net posted wages for 2012. When to file 1040x ) Roland S. When to file 1040x Adams–The back pay award was $15,000 for the periods 7/80-12/81. When to file 1040x He was no longer employed by this state and local government (Section 218) employer in 2012. When to file 1040x (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. When to file 1040x ) 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. When to file 1040x 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. When to file 1040x Employers should report to the SSA special wage payments made to employees and former employees who are recipients of social security retirement benefits. When to file 1040x 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. When to file 1040x 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. When to file 1040x Note. When to file 1040x Payments made after retirement that are part of the normal payroll cycle should not be routinely reported as special wage payments. When to file 1040x Earnings Test. When to file 1040x   Benefits paid to a social security beneficiary under full retirement age may be reduced if the beneficiary continues to work. When to file 1040x The SSA uses the information in boxes 1, 3, and 5 of Form W-2 to determine the beneficiary's current year earnings. When to file 1040x 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. When to file 1040x 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. When to file 1040x Therefore, employer reports of special wage payments help prevent incorrect benefit reductions. When to file 1040x Reporting Special Wage Payments Employers must report special wage payments for income tax purposes and social security and Medicare taxes in the year received. When to file 1040x Report income, social security, and/or Medicare taxes for special wage payments on Form W-2. When to file 1040x See Nonqualified Deferred Compensation and Section 457 Plans, later, for reporting nonqualified deferred compensation plan deferrals and payments on Form W-2. When to file 1040x 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. When to file 1040x Submit reports after the close of the tax year. When to file 1040x To avoid delays in processing, submit reports in time to reach the SSA by April 1. When to file 1040x Use one of the following reporting methods. When to file 1040x Electronic reporting. When to file 1040x   Special wage payment files can be sent electronically by logging onto Business Services Online (BSO) via the socialsecurity. When to file 1040x gov website. When to file 1040x BSO enables organizations and authorized individuals to conduct business with and submit confidential information to the Social Security Administration. When to file 1040x You must register to use this website. When to file 1040x The web address is www. When to file 1040x socialsecurity. When to file 1040x gov/bso/bsowelcome. When to file 1040x htm. When to file 1040x   Use the specifications and record layout shown in  Table 2, later. When to file 1040x Only one file at a time may be submitted. When to file 1040x If your file is large (>10MB), or you have a slow internet connection, the transmission will be faster if the file is zipped. When to file 1040x A zipped file contains a file that has been compressed to reduce its file size. When to file 1040x WinZip and PKZIP are examples of acceptable compression packages. When to file 1040x   Electronic submissions not meeting the specifications in Table 2 will be rejected. When to file 1040x Paper listing. When to file 1040x   A paper listing can be used to report special wage payments to several employees. When to file 1040x Use the format shown in Table 3, later. When to file 1040x Submit paper listings to the local SSA office nearest your place of business. When to file 1040x Visit www. When to file 1040x socialsecurity. When to file 1040x gov/locator to find a Social Security office near you. When to file 1040x Form SSA-131. When to file 1040x   Use Form SSA-131 to report special wage payments made to an employee. When to file 1040x 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. When to file 1040x    This image is too large to be displayed in the current screen. When to file 1040x Please click the link to view the image. When to file 1040x Publication 957 Reporting Back Pay to the Social Security Administration Instructions for Form SSA–131   EMPLOYER INSTRUCTIONS FOR COMPLETING SPECIAL WAGE PAYMENT FORM 1. When to file 1040x Provide the EIN that was used or will be used to report the employee's wages on the Form W-2. When to file 1040x 2. When to file 1040x Enter the date the employee retired. When to file 1040x Enter “Not Retired” if the employee has not retired. When to file 1040x 3. When to file 1040x 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. When to file 1040x This date should be the same as or earlier than the date in item “2”. When to file 1040x Enter “Not Retired” if the employee has not retired. When to file 1040x 4. When to file 1040x 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. When to file 1040x  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. When to file 1040x Accumulated sick payments which were paid in a lump sum based on “retirement” as the sole condition of payment. When to file 1040x Accumulated sick payments paid at or after the date in item 3, which were earned in a year prior to the tax year. When to file 1040x Payments “on account of retirement”–dismissal, severance or termination pay paid because of retirement. When to file 1040x 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. When to file 1040x Stock Options. When to file 1040x   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”). When to file 1040x That were reported or will be reported under “Nonqualified Plans” on the Form W-2. When to file 1040x That were deducted from the employee's wages and paid to a deferred compensation plan (e. When to file 1040x g. When to file 1040x , 401k). When to file 1040x Employees health and dental plan benefits (non-covered/non-taxable for Social Security Wages). When to file 1040x Bonuses earned and paid in the tax year. When to file 1040x 5. When to file 1040x Check whether payments listed in item 4 will be made for years after the tax year. When to file 1040x If yes, please show the amounts and years in which these will be paid, if known. When to file 1040x 6. When to file 1040x Nonqualified deferred compensation and section 457 plans only. When to file 1040x 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. When to file 1040x 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). When to file 1040x Paperwork/Privacy Act Notice: This report is authorized by regulation 20 CFR 404. When to file 1040x 702. When to file 1040x 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. When to file 1040x 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. When to file 1040x We may also use the information you give us when we match records by computer. When to file 1040x Matching programs compare our records with those of other Federal, State, or local government agencies. When to file 1040x Many agencies may use matching programs to find or prove that a person qualifies for benefits paid by the Federal Government. When to file 1040x The law allows us to do this even if you do not agree to it. When to file 1040x Explanations about these and other reasons why information you provide us may be used or given out are available in Social Security Offices. When to file 1040x If you want to learn more about this, contact any Social Security Office. When to file 1040x The Paperwork Reduction Act: This information collection meets the clearance requirements of 44 U. When to file 1040x S. When to file 1040x C. When to file 1040x §3507, as amended by Section 2 of the Paperwork Reduction Act of 1995. When to file 1040x You are not required to answer these questions unless we display a valid Office of Management and Budget control number. When to file 1040x We estimate that it will take you about 20 minutes to read the instructions, gather the necessary facts, and answer the questions. When to file 1040x Form SSA-131 (8-2001) EF (06-2002)   Submit Form SSA-131 to the SSA office nearest your place of business. When to file 1040x Or, the employee can submit it to the SSA office handling the claim. When to file 1040x You or the employee must submit this form before the SSA can exclude the special wage payments for purposes of the earnings test. When to file 1040x 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. When to file 1040x Do not report payments from nonqualified deferred compensation or section 457 plans that were reported in box 11 of Form W-2. When to file 1040x Use Form SSA-131 if deferrals to and payments from nonqualified or section 457 plans occurred during the tax year. When to file 1040x 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. When to file 1040x It should not count for the social security earnings test. When to file 1040x 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. When to file 1040x 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. When to file 1040x 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. When to file 1040x Nonqualified and section 457 plans are reported differently than other special wage payments. When to file 1040x See Reporting Amounts Deferred to Nonqualified and Section 457 Plans below for specific instructions. When to file 1040x 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. When to file 1040x 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. When to file 1040x The plans' deferrals, or contributions, are not subject to social security and Medicare taxes until the period of substantial risk of forfeiture ends. When to file 1040x No risk of forfeiture. When to file 1040x   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. When to file 1040x Example. When to file 1040x Company X's nonqualified deferred compensation plan allows the deferral of up to $20,000 of employee salaries each year. When to file 1040x The plan has no risk of forfeiture. When to file 1040x In 2012, Employee A defers $20,000 to the plan from a total salary of $200,000. When to file 1040x 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. When to file 1040x   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. When to file 1040x The accumulated deferrals are reported along with any other social security and Medicare wages earned during the year. When to file 1040x   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. When to file 1040x If the employee continues working, future deferrals are social security and Medicare wages when they are earned. When to file 1040x    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. When to file 1040x Risk of forfeiture lapses at retirement. When to file 1040x   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. When to file 1040x 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. When to file 1040x   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. When to file 1040x    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. When to file 1040x Example—risk of forfeiture. When to file 1040x 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. When to file 1040x B's wages, including this year's deferred amount, are $80,000. When to file 1040x 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. When to file 1040x 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. When to file 1040x Example. When to file 1040x Employee D retired from the XYZ company and began receiving social security benefits. When to file 1040x 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. When to file 1040x In addition, D agreed to continue performing services for XYZ, but on a part-time basis for wages of $15,000 per year. When to file 1040x D made no deferrals to the nonqualified plan this year. When to file 1040x 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. When to file 1040x For more information, see Reporting Special Wage Payments , earlier. When to file 1040x 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). When to file 1040x Report to the SSA on Form SSA-131 the total amount the employee earned during the tax year. When to file 1040x 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. When to file 1040x See Form SSA-131 and its instructions, earlier. When to file 1040x Example. When to file 1040x Employee K retired this year from Company XYZ and began receiving social security benefits. When to file 1040x During the year he earned wages of $50,000 and deferred $35,000 of the wages into the company's nonqualified deferred compensation plan. When to file 1040x K also received $75,000 in payments from the company's nonqualified plan. When to file 1040x 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. When to file 1040x 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. When to file 1040x If you report section 409A deferrals, show the amount in box 12 of Form W-2 using code Y. When to file 1040x For more information, see Notice 2008-115, 2008-52 I. When to file 1040x R. When to file 1040x B. When to file 1040x 1367, available at www. When to file 1040x irs. When to file 1040x gov/irb/2008-52_IRB/ar10. When to file 1040x html. When to file 1040x Special reporting rules apply when an NQDC plan is not compliant with section 409A (when there has been a “plan failure”). When to file 1040x Income included under section 409A from an NQDC plan is reported in box 1 and box 12 of Form W-2 using code Z. When to file 1040x See Notice 2008-115. When to file 1040x The following examples use small dollar amounts for illustrative purposes. When to file 1040x 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). When to file 1040x The term “vested” in the following examples means that the amount deferred is not subject to a substantial risk of forfeiture. When to file 1040x Conversely, the term “not vested” means that the amount deferred is subject to a substantial risk of forfeiture. When to file 1040x 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. When to file 1040x 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. When to file 1040x Example 1: Deferral that is immediately vested (no substantial risk of forfeiture) with no distributions and no vesting of prior-year deferrals. When to file 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into her employer’s NQDC plan. When to file 1040x The deferral of $20 was vested upon deferral and there was an employer match of $10 under the plan, which was also vested. When to file 1040x Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10. When to file 1040x 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). When to file 1040x 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. When to file 1040x 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. When to file 1040x Regular pay = $200; Deferral, not vested = $20; Employer match, not vested = $10. When to file 1040x 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). When to file 1040x 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. When to file 1040x The deferral of $20 was vested upon deferral. When to file 1040x During the year, $100 of prior-year deferrals and $15 of investment earnings on the $100 of prior-year deferrals became vested. When to file 1040x Regular pay = $200; Deferral, vested = $20; Vesting of prior-year deferrals = $100; Vesting of investment earnings on $100 of prior-year deferral = $15. When to file 1040x 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). When to file 1040x For the year, the employee’s regular pay was $100, and the employee deferred no pay into the employer’s NQDC plan. When to file 1040x There was no vesting of prior-year deferrals under the plan. When to file 1040x During the year, there were total distributions of $50 from the plan to the employee. When to file 1040x Regular pay = $100; Distribution = $50. When to file 1040x 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). When to file 1040x   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. When to file 1040x Instead, report on Form SSA-131 the total amount the employee earned during the year. When to file 1040x * Submit the SSA-131 to the nearest SSA office or give it to the employee. When to file 1040x   *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. When to file 1040x Do not consider prior-year deferrals that are vesting in the current year. When to file 1040x If there was a plan failure, the box 1 amount in this calculation should be as if there were no plan failure. When to file 1040x Example 5: Deferral that is immediately vested and there are distributions (no vesting of prior-year deferrals). When to file 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. When to file 1040x There was also an employer match of $10. When to file 1040x The deferral and employer match were vested upon deferral. When to file 1040x There was no vesting of prior-year deferrals under the plan. When to file 1040x During the year, there were total distributions of $50 from the plan to the employee. When to file 1040x Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10; Distribution = $50. When to file 1040x 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. When to file 1040x 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). When to file 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. When to file 1040x The deferral was not vested upon deferral. When to file 1040x There was no vesting of prior-year deferrals under the plan. When to file 1040x During the year, there were total distributions of $50 from the plan to the employee. When to file 1040x Regular pay = $200; Deferral, not vested = $20; Distribution = $50. When to file 1040x 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). When to file 1040x 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). When to file 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. When to file 1040x The deferral was vested upon deferral. When to file 1040x There was vesting of $100 of prior-year deferrals and $15 of earnings on the $100 prior-year deferral under the plan. When to file 1040x During the year, there were total distributions of $50 from the plan to the employee. When to file 1040x Regular pay = $200; Deferral, vested = $20; Distribution = $50; Vesting of prior-year deferrals ($100) and earnings on those prior-year deferrals ($15) = $115. When to file 1040x 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. When to file 1040x 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). When to file 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. When to file 1040x The deferral was not vested upon deferral. When to file 1040x There was also vesting of prior-year deferrals and employer matches and earnings on these amounts under the plan ($115). When to file 1040x During the year, there were total distributions of $50 from the plan to the employee. When to file 1040x 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. When to file 1040x 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. When to file 1040x File Form SSA-131 -0-     Form SSA-131 Completion Item 6 ($230 Amount from Box 1 of Form W-2 minus $50 Distribution) $180 Table 2. When to file 1040x Specifications for Electronic Reporting of Special Wage Payments Record Position  Field Size   Description Start End 1 3 3 Record Type—must include only the capital letters “SWP” 4 12 9 SSN—must be numeric and may not be all zeros 13 27 15 Last Name—all capitals and no punctuation; may have blanks on right only 28 38 11 First Name—all capitals and no punctuation; may have blanks on right only 39 39 1 Middle Initial—must be either a capital letter or blank 40 48 9 EIN—must be numeric and may not be all zeros 49 59 11 Payment—must be numeric; may not be all zeros; last two digits on right are assumed to be cents; no period or dollar sign 60 63 4 Payment Year—must be only a four-digit year 64 66 3 SSA Office Code—must be numeric and may be all zeros 67 67 1 Payment Type Code—must be the capital letter “T” 68 117 50 Filler  The record format is a fixed length of 117. When to file 1040x  The file format is ASCII. When to file 1040x  Submit only one file at a time. When to file 1040x   Table 3. When to file 1040x Sample—Paper Listing for Reporting Special Wage Payments to Several Employees Report of Special Wage PaymentsTax Year: Page of A. When to file 1040x Employer Name: EIN:   Address: Contact Name:     Phone: ( )   . When to file 1040x 1) B. When to file 1040x Employee Name: (Last) (First) (MI)   C. When to file 1040x SSN: D. When to file 1040x SWP:$ E. When to file 1040x Type: Other: 2) B. When to file 1040x Employee Name: (Last) (First) (MI)   C. When to file 1040x SSN: D. When to file 1040x SWP:$ E. When to file 1040x Type: Other: 3) B. When to file 1040x Employee Name: (Last) (First) (MI)   C. When to file 1040x SSN: D. When to file 1040x SWP:$ E. When to file 1040x Type: Other: 4) B. When to file 1040x Employee Name: (Last) (First) (MI)   C. When to file 1040x SSN: D. When to file 1040x SWP:$ E. When to file 1040x Type: Other: 5) B. When to file 1040x Employee Name: (Last) (First) (MI)   C. When to file 1040x SSN: D. When to file 1040x SWP:$ E. When to file 1040x Type: Other:     INSTRUCTIONS:   Enter tax year and page number. When to file 1040x   A. When to file 1040x 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. When to file 1040x   B. When to file 1040x Employee's name. When to file 1040x   C. When to file 1040x Employee's social security number (SSN). When to file 1040x   D. When to file 1040x Total amount of special wage payments made to the employee. When to file 1040x   E. When to file 1040x 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. When to file 1040x   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. When to file 1040x (Get Form SSA-131. When to file 1040x )                 Prev  Up  Next   Home   More Online Publications
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The When To File 1040x

When to file 1040x Index A Adjusted basis Worksheet 1 to figure, Worksheet A Instructions. When to file 1040x Assistance (see Tax help) F Free tax services, How To Get Tax Help H Help (see Tax help) M More information (see Tax help) P Publications (see Tax help) T Tax help, How To Get Tax Help Taxpayer Advocate, Taxpayer Advocate Service. When to file 1040x TTY/TDD information, How To Get Tax Help W Worksheets Adjusted basis (Worksheet 1), Worksheet A Instructions. When to file 1040x Prev  Up     Home   More Online Publications