If the deferred Social Security is not forgiven by January 1, 2021, complete the following steps to set up a pay code to pay back the deferred amount, determine the deferred amount for each employee, and add the pay code to pay back the deferred amount to the employee records.

1. Deferred Social Security tax obligations are paid.
2. Employee tax records remain accurate.
3. Employer tax reporting requirements are met.
4. Outstanding Social Security tax balances are reduced or eliminated.

Organizations typically collect deferred Social Security during a designated repayment period until the full deferred amount has been recovered.

What's new

• Repayment of deferred Social Security has been extended to 12/31/2021. (https://www.irs.gov/pub/irs-drop/n-21-11.pdf) (2021Feb09)

Step 1. Add the Social Security Deferral Payback pay code to the Pay Codes table

Do this...

1. Open Connect Payroll > Organization > Pay Codes.

2. Use the Pay Code box to enter the Social Security pay code, and then press Enter.

If you're organization uses a different pay code title for Social Security, just replace "Social Security Tax (74-00)" with the pay code title that your organization uses.

3. Click Copy (SHIFT+F7).

4. Fill in the Copy To section in the Copy Record window.

• Use the Pay Code box to enter 74

• Use the Sub Code box to enter 1

Note: If your organization already has a pay code 74-01, add 1 to the last digit in the sub code that was assigned to pay code 74-## and use that number as the sub code. For example, 74-01 + 1 = 74-02. When you complete the remaining steps, substitute the pay code for the Social Security Deferral Payback pay code that your organization is using when the instructions use 74-01.

• Click OK.

Payroll copies the Social Security pay code and displays it in the Pay Codes view.

5. Update the pay code title and abbreviated title.

• Use the Title box to enter Social Security Def Payback.

• Use the Abbreviated box to enter SS Def.

6. Set up the employee portion of the pay code to calculate an amount.

• Click to select the Employee tab.

• Check the Amount/Rate/Percent Type box shows Percent of Amount.

• Check the Percentage box displays 6.2000-

Why is the pay code title showing 74-01 Social Security Tax? The pay code title will be updated when you save the new pay code. Then, the pay code title will show Social Security Deferral Payback.

7. Set up the employer portion of the pay code to not calculate an amount.

• Click to select the Employer tab

• Use the Amount/Rate/Percent Type box to select Do Not Calculate.

8. Click Save (CTRL+S).

The Social Security Deferral Payback pay code is saved. It the deferral amount will be deducted from the total Social Security deferral amount until it is paid off.  

Step 2. Identifying employees who deferred Social Security

Find out which employees deferred Social Security in 2020. You can use the list that you saved when you set up Social Security deferral in 2020 or you can print a report of the employees who are deferring Social Security.

What do you want to do?

• 
  

  I have a list of employees who deferred Social Security. If you saved a list of the employees who deferred Social Security, review the list and skip to Step 3. Determining each employee's deferred Social Security amount.  

  
  
• 
  

  I need to print a list of employees who deferred Social Security. If you did not create a list of employees who deferred Social Security, set up the following report to find employees who have an employee pay code for Social Security that is set up to use the 2020 Executive Order Social Security Tax Deferral calculation formula instead of calculating a percent of amount of -6.200%.

  
  

How do I set up the 2020 Social Security Deferral Employee Pay Codes Report? Follow the instructions in How Do I update my Social Security pay code and employee pay codes for Social Security? to set up the report.

Step 3. Determining each employee's deferred Social Security amount

Print the Pay Code Transaction Report by employee number to find out the total amount the employer paid for Social Security taxes for employees who deferred Social Security in 2020. Since the employer pays the same Social Security amount as the employee, you can use the employer paid portion from the report as the Social Security deferred amount owed by the employee.

Do this...

1. Open Connect Payroll > Reports > Pay Code Transaction Report.

2. Use the Title box to select Pay Code Transaction Report - By Number [Caselle Master].

3. Change the report date range to select September 1, 2020 to December 31, 2020.

• 
  

  Click Advanced Options.

  
  
• 
  

  Use the Report Dates Advanced window to select Custom Date as the Beginning Date Type and Ending Date Type.

  
  
• 
  

  Use the From box to enter 09/01/2020

  
  
• 
  

  Use the To box to enter 12/31/2020

  
  

4. Set up the pay code options.

Set up the report to print the totals for the employer portion of the amount paid on the Social Security pay code.

Click Add a New Pay Code Field.

Use the Add Pay Code Field window to select the Social Security pay code. Change the Type to Employer Amount.

5. Click Save (CTRL+S).

Save the new report for later. You may need to print it again to determine the unpaid Social Security deferred amount if an employee is terminated during the deferral period in 2020 or during the payback period in 2021.  

Click to select Save As New Report, enter Social Security Deferred Payback, and then click OK.

The report is saved and the new report is added to the reports that you can select from the Title box.

6. Click Print Preview (CTRL+Q).

The report shows the employer paid portion of the Social Security tax for each employee.

7. Use the report to review the total amount the employer paid for Social Security tax on employees who deferred Social Security in 2020.  

Because the employer and employee make matching contributions to Social Security, you can use the employer paid total as the amount owed by the employees who deferred Social Security in 2020.

Step 4. Adding the pay code to pay back the deferred amount to employee records

Add the Social Security Deferral Payback pay code to the employees who deferred Social Security in 2020. Adding the Social Security Deferral Payback pay code will deduct the amount to pay back from the employee's payroll check.

Do this...

1. Open Connect Payroll > Employees > Modify Existing Employees.

2. Use the Employees box to enter the name or number of an employee who deferred Social Security in 2020.

How do I know which employees to update? Use the master list that you created when you set up the employees who deferred Social Security or use the report from Step 2. Identifying employees who deferred Social Security.

3. Click to select the Pay Codes tab.

4. Click Select Pay Code.

5. Use the Selection window to move the SS Def (74-01) pay code to the Selected Pay Codes list, and then click OK.

You want to select the Social Security Def Payback pay code that you set up in Step 1. Setting up a pay code to pay back the deferred amount.   

6.  Double-click the Social Security Deferral Payback pay code.

7. Enter the total Social Security deferred amount the employee will pay back as the maximum limit on the employee pay code.

Use the amount on the Pay Code Transaction Report - By Number (from Step 4) to look up the Social Security amount the employer paid for the employee. Setting a maximum limit on the Social Security Deferral Payback pay code will stop the pay code from calculating when the maximum amount is met.

Click to select the Employee Limits tab.

Use the Maximum box to enter the total Social Security amount paid for the employee by the employer from 9/1/2020 to 12/31/2020.

8. Click Save (CTRL+S).

The Social Security Deferral Payback pay code is added to the employee. Repeat these steps to add the Social Security Deferral Payback pay code to each employee who deferred Social Security in 2020.