A Presidential Memorandum was issued on August 8, 2020, and guidance followed from the Internal Revenue Service (IRS) on August 28, 2020, to temporarily defer Social Security (Old-Age, Survivors, and Disability Insurance (OASDI)) tax withholdings for eligible employees.
For eligible employees serviced by the National Finance Center (NFC), which includes U.S. Department of Agriculture employees, the OASDI tax withholdings were temporarily deferred effective Pay Period (PP) 18‒25, 2020. Eligible employees are those who make less than $4,000 per bi-weekly period in social security wages.
Per IRS guidance, collection of the deferred taxes will be taken from wages paid between January 1 through April 30, 2021 (PP 26, 2020, through PP 07, 2021), known as the repayment period. The total amount of the 2020 deferred OASDI withholding will be collected on a prorated basis from pay, divided evenly among these pay periods. NFC has computed the total deferred amount by employee which constitutes the total amount to be repaid. This amount will be divided by the eight pay periods to compute a per pay period repayment amount.
During the repayment period, the payroll system will calculate the normal pay period OASDI taxes based upon the OASDI wages earned in that pay period, and then add the prorated repayment amount calculated as defined above. This will be reflected on the Statement of Earnings and Leave, starting in PP 26, 2020.
Below is a table illustrating the deferral and repayment pay periods for an employee that has $800 in deferred OASDI taxes.
|
Deferral Period |
|||||
|---|---|---|---|---|---|
|
Pay Period |
OASDI Deferred |
OASDI Current Payment |
OASDI Repayment |
OASDI Deduction Reflected on E&L |
OASDI Deferred Balance |
|
18 |
$100 |
$0 |
$0 |
$0 |
$100 |
|
19 |
$100 |
$0 |
$0 |
$0 |
$200 |
|
20 |
$100 |
$0 |
$0 |
$0 |
$300 |
|
21 |
$100 |
$0 |
$0 |
$0 |
$400 |
|
22 |
$100 |
$0 |
$0 |
$0 |
$500 |
|
23 |
$100 |
$0 |
$0 |
$0 |
$600 |
|
24 |
$100 |
$0 |
$0 |
$0 |
$700 |
|
25 |
$100 |
$0 |
$0 |
$0 |
$800 |
|
Repayment Period |
|||||
|---|---|---|---|---|---|
|
Pay Period |
OASDI Deferred |
OASDI Current Payment |
OASDI Repayment |
OASDI Deduction Reflected on E&L |
OASDI Repayment Balance |
|
|
|
|
|
|
$800 |
|
26 |
$0 |
$100 |
$100 |
$200 |
$700 |
|
01 |
$0 |
$100 |
$100 |
$200 |
$600 |
|
02 |
$0 |
$100 |
$100 |
$200 |
$500 |
|
03 |
$0 |
$100 |
$100 |
$200 |
$400 |
|
04 |
$0 |
$100 |
$100 |
$200 |
$300 |
|
05 |
$0 |
$100 |
$100 |
$200 |
$200 |
|
06 |
$0 |
$100 |
$100 |
$200 |
$100 |
|
07 |
$0 |
$100 |
$100 |
$200 |
$0 |
Employees in pay status through PP 07, 2021, will have repaid their entire OASDI deferred withholdings.
NFC will issue a 2020 Form W-2c (Corrected Wage and Tax Statement) to impacted employees who have had OASDI taxes deferred in 2020 and repaid in 2021. Per IRS guidance, if you had only one employer during the 2020 tax year, no further action is required on the employees’ part, including no need to file an amended tax return. No amended tax return is required provided the only change is an update to Box 4 (Social Security Tax Withheld) to include the deferred OASDI taxes for 2020 and repaid in 2021. However, if the individual had two or more employers in 2020, there may be additional steps required. See www.irs.gov/forms-pubs/form-w-2-reporting-of-employee-social-security-tax-deferred-under-notice-2020-65, for further information.
Employees who separated or retired before May 2021 are still responsible for the OASDI tax repayment. You will receive a notice with instructions on how to repay your deferred OASDI.
The table below illustrate the results of a separation or retirement within the payment period.
Example 1:
This employee’s last paycheck is PP 23, 2020, at which time $600 will still be owed. The employee will receive a notice with guidance on how to repay this deferred OASDI.
|
Deferral Period |
|||||
|---|---|---|---|---|---|
|
Pay Period |
OASDI Deferred |
OASDI Current Payment |
OASDI Repayment |
OASDI Deduction Reflected on E&L |
OASDI Deferred Balance |
|
18 |
$100 |
$0 |
$0 |
$0 |
$100 |
|
19 |
$100 |
$0 |
$0 |
$0 |
$200 |
|
20 |
$100 |
$0 |
$0 |
$0 |
$300 |
|
21 |
$100 |
$0 |
$0 |
$0 |
$400 |
|
22 |
$100 |
$0 |
$0 |
$0 |
$500 |
|
23 |
$100 |
$0 |
$0 |
$0 |
$600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment Period |
|||||
|---|---|---|---|---|---|
|
Pay Period |
OASDI Deferred |
OASDI Current Payment |
OASDI Repayment |
OASDI Deduction Reflected on E&L |
OASDI Repayment Balance |
|
|
|
|
|
|
$600 |
|
|
|
|
|
|
|
The tables below illustrate the results of a separation or retirement within the repayment period.
Example 2:
This employee’s last paycheck is PP 26, 2020, at which time $700 will still be owed. The employee will receive a notice with guidance on how to repay this deferred OASDI.
|
Deferral Period |
|||||
|---|---|---|---|---|---|
|
Pay Period |
OASDI Deferred |
OASDI Current Payment |
OASDI Repayment |
OASDI Deduction Reflected on E&L |
OASDI Deferred Balance |
|
18 |
$100 |
$0 |
$0 |
$0 |
$100 |
|
19 |
$100 |
$0 |
$0 |
$0 |
$200 |
|
20 |
$100 |
$0 |
$0 |
$0 |
$300 |
|
21 |
$100 |
$0 |
$0 |
$0 |
$400 |
|
22 |
$100 |
$0 |
$0 |
$0 |
$500 |
|
23 |
$100 |
$0 |
$0 |
$0 |
$600 |
|
24 |
$100 |
$0 |
$0 |
$0 |
$700 |
|
25 |
$100 |
$0 |
$0 |
$0 |
$800 |
|
Repayment Period |
|||||
|---|---|---|---|---|---|
|
Pay Period |
OASDI Deferred |
OASDI Current Payment |
OASDI Repayment |
OASDI Deduction Reflected on E&L |
OASDI Repayment Balance |
|
|
|
|
|
|
$800 |
|
26 |
$0 |
$100 |
$100 |
$200 |
$700 |
Example 3:
This employee’s last paycheck is PP 04, 2021, at which time $300 will still be owed. The employee will receive a notice with guidance on how to repay this deferred OASDI.
|
Deferral Period |
|||||
|---|---|---|---|---|---|
|
Pay Period |
OASDI Deferred |
OASDI Current Payment |
OASDI Repayment |
OASDI Deduction Reflected on E&L |
OASDI Deferred Balance |
|
18 |
$100 |
$0 |
$0 |
$0 |
$100 |
|
19 |
$100 |
$0 |
$0 |
$0 |
$200 |
|
20 |
$100 |
$0 |
$0 |
$0 |
$300 |
|
21 |
$100 |
$0 |
$0 |
$0 |
$400 |
|
22 |
$100 |
$0 |
$0 |
$0 |
$500 |
|
23 |
$100 |
$0 |
$0 |
$0 |
$600 |
|
24 |
$100 |
$0 |
$0 |
$0 |
$700 |
|
25 |
$100 |
$0 |
$0 |
$0 |
$800 |
|
Repayment Period |
|||||
|---|---|---|---|---|---|
|
Pay Period |
OASDI Deferred |
OASDI Current Payment |
OASDI Repayment |
OASDI Deduction Reflected on E&L |
OASDI Repayment Balance |
|
|
|
|
|
|
$800 |
|
26 |
$0 |
$100 |
$100 |
$200 |
$700 |
|
01 |
$0 |
$100 |
$100 |
$200 |
$600 |
|
02 |
$0 |
$100 |
$100 |
$200 |
$500 |
|
03 |
$0 |
$100 |
$100 |
$200 |
$400 |
|
04 |
$0 |
$100 |
$100 |
$200 |
$300 |
Federal employees with questions concerning this notification should contact their Servicing Personnel Office. Authorized Agency representatives with questions concerning this notification should contact the NCC at 1-855-NFC-4GOV (1-855-632-4468) or via ServiceNow.
- Federated Service Now Users: nfcerp.servicenowservices.com
- Non-Federated Service Now Users: nfcerp.servicenowservices.com/sp_ess
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