At the end of December, the 2020 Social Security tax deferral will end. Beginning January 2021, the normal 6.2% Social Security tax withholdings will again be deducted and you will also see an additional deduction for the deferred 2020 Social Security tax collection taken from your pay.
Per IRS guidance, the Social Security taxes deferred in 2020 will be collected from your pay between January 1 and April 30, 2021.
- The amount of Social Security taxes deferred in 2020 will be collected in eight installments between pay period ending January 16 and April 24, 2021.
- Beginning in January 2021, your myPay LES Remarks section will include the 2020 deferred OASDI collection amount as well as your remaining balance to be collected. The amount of OASDI deferred in 2020 can be calculated using your final 2020 LES in myPay, by subtracting the OASDI year-to-date (deductions tab) from OASDI year-to-date (benefits tab).
Separating from Service - Collection Process:
If you separate or retire in 2021, before April 30 and prior to the deferred Social Security tax being collected in full, you are still responsible for the remainder of your Social Security tax repayment. The unpaid balance will be collected from your final pay. If there are insufficient funds to collect the full amount, you may receive a debt letter with instructions for repayment.
Tax Filing and W-2 Reporting:
Your 2020 W-2 will be issued in January. You will receive a W-2c (Corrected Wages and Tax Statement) that includes the collection of deferred Social Security taxes in 2021; however, this does not change the deadlines established by the IRS for filing 2020 income tax returns. If you have questions on tax filing, the IRS provided instructions for employees receiving a W-2c due to the Social Security tax deferral. See IRS W-2 reporting link below.
Social Security (Old Age, Survivors, and Disability Insurance) or "OASDI" tax withholdings were deferred effective September through December 2020, for employees who had wages subject to OASDI of less than $4,000 in any given pay period. This action was in response to the Presidential Memorandum issued on August 8, 2020, the Internal Revenue Service Notice 2020-65 issued August 28, 2020, and at the direction of the Office of Management and Budget and the Office of Personnel Management.
For more information, visit: https://www.dfas.mil/taxes/Social-Security-Deferral/.
- Tax Deferral Implementation: https://www.irs.gov/newsroom/guidance-issued-to-implement-presidential-memorandum-deferring-certain-employee-social-security-tax-withholding
- W-2 Reporting: https://www.irs.gov/forms-pubs/form-w-2-reporting-of-employee-social-security-tax-deferred-under-notice-2020-65
For questions on the collection of the temporary tax deferral, contact your Agency's Customer Service Representative.
For more information on impacts of the payroll deferral, consult with a private financial advisor.
Information delivered by Defense Finance and Accounting Service