Social Security Payroll Tax Deferral
What to expect in 2022
In response to a Presidential Memorandum issued on August 8, 2020, Social Security (Old Age, Survivors, and Disability Insurance) or “OASDI” tax withholdings were temporarily deferred from most service members and civilian employees from September through December 2020 and were collected back from wages paid from January to December 2021.
The majority of collections were completed in 2021; however collections will continue for some military members and civilian employees who have not repaid their deferred taxes in full during 2021.
Members who paid in full will receive a W-2C (Corrected Wage and Tax Statement) In January 2022 reflecting full withholding of the employee’s share of Social Security taxes in box 4 of the W-2. Per IRS guidance, no further steps are required if you had only one employer in 2020 and your 2020 Form W-2C only shows a correction to box 4. You should consult with your tax preparer about any questions.
For some Reserve, National Guard, and active duty members, who were not able to pay in full in 2020, collection will continue as noted below.
Reserve and National Guard
Many Reservists and National Guard members did not repay the entirety of the 2020 deferred taxes during 2021 due to irregular and intermittent duty schedules. In order to fulfill the DoD’s legal responsibility to collect and pay the employee’s share of Social Security taxes, the collection rate for Reserve and National Guard members will increase to 10% of net disposable pay from each payment received during 2022 until the deferred tax balance is repaid in full.
A small group of Active Component members will also owe a remaining deferred tax balance in 2022 as a result of periods of inactive pay status. For those members, the 2020 deferred Social Security taxes will continue to be collected until paid in full.
See more information on continued collection in the Military Members Fact Sheet below.
Corrected 2020 W-2Cs, reflecting full withholding of the employee’s share of Social Security taxes in box 4 of the W-2, will be issued to employees who had their Social Security (Old Age, Survivors, and Disability Insurance) or “OASDI” collected in full by pay period ending December 18, 2021. Per IRS guidance, no further steps are required if you had only one employer in 2020 and your 2020 Form W-2C only shows a correction to box 4. You should consult with your tax preparer about any questions.
In instances of employees in non-pay status, Social Security taxes (OASDI) were unable to be collected in full. Collection of the remaining balances for these employees will be deducted from pay beginning with the pay period ending January 15, 2022. The collection amount will be calculated based on the current balance spread over 8 pay periods. See more information on this collection in the Civilian Pay Fact Sheet.
Separating or retiring prior to repayment?
If you separate or retire prior to the deferred Social Security tax being collected in full, the unpaid balance will either be collected from your final pay or you may receive a letter with instructions for repayment. Collection will occur through the debt management process. You will receive a letter via U.S. mail which will provide instructions for repayment. Payments can be made online via Pay.gov.
Still have questions?
See the Military and Civilian FAQs for more information.
Payroll Collection Links
September 2020 Tax Deferral Fact Sheets
Page updated December 28, 2021