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United Way Free Tax Preparation

United way free tax preparation 1. United way free tax preparation   Definitions You Need To Know Table of Contents Other options. United way free tax preparation Exception. United way free tax preparation Certain terms used in this publication are defined below. United way free tax preparation The same term used in another publication may have a slightly different meaning. United way free tax preparation Annual additions. United way free tax preparation   Annual additions are the total of all your contributions in a year, employee contributions (not including rollovers), and forfeitures allocated to a participant's account. United way free tax preparation Annual benefits. United way free tax preparation   Annual benefits are the benefits to be paid yearly in the form of a straight life annuity (with no extra benefits) under a plan to which employees do not contribute and under which no rollover contributions are made. United way free tax preparation Business. United way free tax preparation   A business is an activity in which a profit motive is present and economic activity is involved. United way free tax preparation Service as a newspaper carrier under age 18 or as a public official is not a business. United way free tax preparation Common-law employee. United way free tax preparation   A common-law employee is any individual who, under common law, would have the status of an employee. United way free tax preparation A leased employee can also be a common-law employee. United way free tax preparation   A common-law employee is a person who performs services for an employer who has the right to control and direct the results of the work and the way in which it is done. United way free tax preparation For example, the employer: Provides the employee's tools, materials, and workplace, and Can fire the employee. United way free tax preparation   Common-law employees are not self-employed and cannot set up retirement plans for income from their work, even if that income is self-employment income for social security tax purposes. United way free tax preparation For example, common-law employees who are ministers, members of religious orders, full-time insurance salespeople, and U. United way free tax preparation S. United way free tax preparation citizens employed in the United States by foreign governments cannot set up retirement plans for their earnings from those employments, even though their earnings are treated as self-employment income. United way free tax preparation   However, an individual may be a common-law employee and a self-employed person as well. United way free tax preparation For example, an attorney can be a corporate common-law employee during regular working hours and also practice law in the evening as a self-employed person. United way free tax preparation In another example, a minister employed by a congregation for a salary is a common-law employee even though the salary is treated as self-employment income for social security tax purposes. United way free tax preparation However, fees reported on Schedule C (Form 1040), Profit or Loss From Business, for performing marriages, baptisms, and other personal services are self-employment earnings for qualified plan purposes. United way free tax preparation Compensation. United way free tax preparation   Compensation for plan allocations is the pay a participant received from you for personal services for a year. United way free tax preparation You can generally define compensation as including all the following payments. United way free tax preparation Wages and salaries. United way free tax preparation Fees for professional services. United way free tax preparation Other amounts received (cash or noncash) for personal services actually rendered by an employee, including, but not limited to, the following items. United way free tax preparation Commissions and tips. United way free tax preparation Fringe benefits. United way free tax preparation Bonuses. United way free tax preparation   For a self-employed individual, compensation means the earned income, discussed later, of that individual. United way free tax preparation   Compensation generally includes amounts deferred in the following employee benefit plans. United way free tax preparation These amounts are elective deferrals. United way free tax preparation Qualified cash or deferred arrangement (section 401(k) plan). United way free tax preparation Salary reduction agreement to contribute to a tax-sheltered annuity (section 403(b) plan), a SIMPLE IRA plan, or a SARSEP. United way free tax preparation Section 457 nonqualified deferred compensation plan. United way free tax preparation Section 125 cafeteria plan. United way free tax preparation   However, an employer can choose to exclude elective deferrals under the above plans from the definition of compensation. United way free tax preparation The limit on elective deferrals is discussed in chapter 2 under Salary Reduction Simplified Employee Pension (SARSEP) and in chapter 4. United way free tax preparation Other options. United way free tax preparation   In figuring the compensation of a participant, you can treat any of the following amounts as the employee's compensation. United way free tax preparation The employee's wages as defined for income tax withholding purposes. United way free tax preparation The employee's wages you report in box 1 of Form W-2, Wage and Tax Statement. United way free tax preparation The employee's social security wages (including elective deferrals). United way free tax preparation   Compensation generally cannot include either of the following items. United way free tax preparation Nontaxable reimbursements or other expense allowances. United way free tax preparation Deferred compensation (other than elective deferrals). United way free tax preparation SIMPLE plans. United way free tax preparation   A special definition of compensation applies for SIMPLE plans. United way free tax preparation See chapter 3. United way free tax preparation Contribution. United way free tax preparation   A contribution is an amount you pay into a plan for all those participating in the plan, including self-employed individuals. United way free tax preparation Limits apply to how much, under the contribution formula of the plan, can be contributed each year for a participant. United way free tax preparation Deduction. United way free tax preparation   A deduction is the plan contributions you can subtract from gross income on your federal income tax return. United way free tax preparation Limits apply to the amount deductible. United way free tax preparation Earned income. United way free tax preparation   Earned income is net earnings from self-employment, discussed later, from a business in which your services materially helped to produce the income. United way free tax preparation   You can also have earned income from property your personal efforts helped create, such as royalties from your books or inventions. United way free tax preparation Earned income includes net earnings from selling or otherwise disposing of the property, but it does not include capital gains. United way free tax preparation It includes income from licensing the use of property other than goodwill. United way free tax preparation   Earned income includes amounts received for services by self-employed members of recognized religious sects opposed to social security benefits who are exempt from self-employment tax. United way free tax preparation   If you have more than one business, but only one has a retirement plan, only the earned income from that business is considered for that plan. United way free tax preparation Employer. United way free tax preparation   An employer is generally any person for whom an individual performs or did perform any service, of whatever nature, as an employee. United way free tax preparation A sole proprietor is treated as his or her own employer for retirement plan purposes. United way free tax preparation However, a partner is not an employer for retirement plan purposes. United way free tax preparation Instead, the partnership is treated as the employer of each partner. United way free tax preparation Highly compensated employee. United way free tax preparation   A highly compensated employee is an individual who: Owned more than 5% of the interest in your business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from you of more than $115,000 (if the preceding year is 2012, 2013, or 2014) and, if you so choose, was in the top 20% of employees when ranked by compensation. United way free tax preparation Leased employee. United way free tax preparation   A leased employee who is not your common-law employee must generally be treated as your employee for retirement plan purposes if he or she does all the following. United way free tax preparation Provides services to you under an agreement between you and a leasing organization. United way free tax preparation Has performed services for you (or for you and related persons) substantially full time for at least 1 year. United way free tax preparation Performs services under your primary direction or control. United way free tax preparation Exception. United way free tax preparation   A leased employee is not treated as your employee if all the following conditions are met. United way free tax preparation Leased employees are not more than 20% of your non-highly compensated work force. United way free tax preparation The employee is covered under the leasing organization's qualified pension plan. United way free tax preparation The leasing organization's plan is a money purchase pension plan that has all the following provisions. United way free tax preparation Immediate participation. United way free tax preparation (This requirement does not apply to any individual whose compensation from the leasing organization in each plan year during the 4-year period ending with the plan year is less than $1,000. United way free tax preparation ) Full and immediate vesting. United way free tax preparation A nonintegrated employer contribution rate of at least 10% of compensation for each participant. United way free tax preparation However, if the leased employee is your common-law employee, that employee will be your employee for all purposes, regardless of any pension plan of the leasing organization. United way free tax preparation Net earnings from self-employment. United way free tax preparation   For SEP and qualified plans, net earnings from self-employment is your gross income from your trade or business (provided your personal services are a material income-producing factor) minus allowable business deductions. United way free tax preparation Allowable deductions include contributions to SEP and qualified plans for common-law employees and the deduction allowed for the deductible part of your self-employment tax. United way free tax preparation   Net earnings from self-employment does not include items excluded from gross income (or their related deductions) other than foreign earned income and foreign housing cost amounts. United way free tax preparation   For the deduction limits, earned income is net earnings for personal services actually rendered to the business. United way free tax preparation You take into account the income tax deduction for the deductible part of self-employment tax and the deduction for contributions to the plan made on your behalf when figuring net earnings. United way free tax preparation   Net earnings include a partner's distributive share of partnership income or loss (other than separately stated items, such as capital gains and losses). United way free tax preparation It does not include income passed through to shareholders of S corporations. United way free tax preparation Guaranteed payments to limited partners are net earnings from self-employment if they are paid for services to or for the partnership. United way free tax preparation Distributions of other income or loss to limited partners are not net earnings from self-employment. United way free tax preparation   For SIMPLE plans, net earnings from self-employment is the amount on line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040), Self-Employment Tax, before subtracting any contributions made to the SIMPLE plan for yourself. United way free tax preparation Qualified plan. United way free tax preparation   A qualified plan is a retirement plan that offers a tax-favored way to save for retirement. United way free tax preparation You can deduct contributions made to the plan for your employees. United way free tax preparation Earnings on these contributions are generally tax free until distributed at retirement. United way free tax preparation Profit-sharing, money purchase, and defined benefit plans are qualified plans. United way free tax preparation A 401(k) plan is also a qualified plan. United way free tax preparation Participant. United way free tax preparation   A participant is an eligible employee who is covered by your retirement plan. United way free tax preparation See the discussions of the different types of plans for the definition of an employee eligible to participate in each type of plan. United way free tax preparation Partner. United way free tax preparation   A partner is an individual who shares ownership of an unincorporated trade or business with one or more persons. United way free tax preparation For retirement plans, a partner is treated as an employee of the partnership. United way free tax preparation Self-employed individual. United way free tax preparation   An individual in business for himself or herself, and whose business is not incorporated, is self-employed. United way free tax preparation Sole proprietors and partners are self-employed. United way free tax preparation Self-employment can include part-time work. United way free tax preparation   Not everyone who has net earnings from self-employment for social security tax purposes is self-employed for qualified plan purposes. United way free tax preparation See Common-law employee and Net earnings from self-employment , earlier. United way free tax preparation   In addition, certain fishermen may be considered self-employed for setting up a qualified plan. United way free tax preparation See Publication 595, Capital Construction Fund for Commercial Fishermen, for the special rules used to determine whether fishermen are self-employed. United way free tax preparation Sole proprietor. United way free tax preparation   A sole proprietor is an individual who owns an unincorporated business by himself or herself, including a single member limited liability company that is treated as a disregarded entity for tax purposes. United way free tax preparation For retirement plans, a sole proprietor is treated as both an employer and an employee. United way free tax preparation Prev  Up  Next   Home   More Online Publications
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IRS Statement on Court Ruling Related to Return Preparers

Update Feb. 21, 2014

On Feb. 11, 2014, the U.S. Court of Appeals for the District of Columbia Circuit upheld the decision of the lower court in the case of Loving vs. IRS, finding insufficient statutory support for the IRS’ regulation of federal tax return preparers.

Taxpayer reliance on paid tax return preparers and effective tax administration are inextricably linked to quality return preparation. As we assess the scope and impact of the court’s decision and determine our way forward, our focus on improved competency will continue.  

Please continue to check this site for additional information as it becomes available.

Background

On Friday, Jan. 18, 2013, the United States District Court for the District of Columbia enjoined the Internal Revenue Service from enforcing the regulatory requirements for registered tax return preparers. In accordance with this order, tax return preparers covered by this program are not required to complete competency testing or secure continuing education. The ruling does not affect the regulatory practice requirements for CPAs, attorneys, enrolled agents, enrolled retirement plan agents or enrolled actuaries.

On Friday, Feb. 1, 2013, the court modified its order to clarify that the order does not affect the requirement for all paid tax return preparers to obtain a preparer tax identification number (PTIN). Consistent with this modification, the IRS has reopened the online PTIN system. On March 29, 2013, the IRS appealed the district court opinion.

In July 2013, the IRS refunded testing fees to return preparers who tested or were scheduled to test on or after Jan. 18, 2013 (the date the registered tax return preparer test was enjoined). No decisions have been made about additional refunds related to registered tax return preparer regulations at this time.

 

 

Page Last Reviewed or Updated: 05-Mar-2014

The United Way Free Tax Preparation

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