2020 Employee Social Security Deferral Option

Setup

The Employee Social Security Deferral option is only activated after two events:

1) Employer opts-in to participate in this program
2) Individual employees elect to participate in the program

We'll need to offer a way for the feature to be enabled (e.g. feature flag/company setting) and then allow this to be tracked by employee.

Payroll Calculation

While the tax amount of opt-in employees is deferred, we still need to calculate and store the deferred wages. These will be used later at quarter-end to report to the 941.

During calculation, we’ll want to calculate things as normal, but for those that are opted-in, we’ll want to store the calculated amount as deferred, then zero out the actual tax amount.

The effective period for the deferral is between September 1st and December 31st, 2020.

Check with Sheetal Edrington on specific guidelines for limits, taxable wage definition, etc.

Tax Reporting

The Employee Social Security tax code (FE0000-003) will operate as normal. Total tax will be summed for anyone with taxable wages. The result is the tax amount will be less than it normally would, but the wages will still be representative of the total amount.

An additional statistic (501 record) will likely be added by MT that will be used to report the deferred portion of the EE SS tax. This, combined with the FE0000-003 tax amount should equal the total tax amount that will be reported (6.2% * Total Taxable Wages – a good test case to valid this)

There may or may not be an employee level indicator of this, but it is unknown at this time.

Year End

Pending specific guidance, the deferred amount will be shown in box 14 of the W2.