Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Nm Taxation And Revenue

Nm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And RevenueNm Taxation And Revenue

Nm Taxation And Revenue

Nm taxation and revenue Publication 597 - Main Content Table of Contents Application of Treaty Personal Services Pensions, Annuities, Social Security, and AlimonyRoth IRAs. Nm taxation and revenue Tax-deferred plans. Nm taxation and revenue Investment Income From Canadian Sources Other Income Charitable ContributionsQualified charities. Nm taxation and revenue Income Tax Credits Competent Authority Assistance How To Get Tax HelpText of Treaty U. Nm taxation and revenue S. Nm taxation and revenue Taxation Canadian Taxation Application of Treaty The benefits of the income tax treaty are generally provided on the basis of residence for income tax purposes. Nm taxation and revenue That is, a person who is recognized as a resident of the United States who has income from Canada, will often pay less income tax to Canada on that income than if no treaty was in effect. Nm taxation and revenue Article IV provides definitions of residents of Canada and the United States, and provides specific criteria for applying the treaty in cases where a taxpayer is considered by both countries to be a resident. Nm taxation and revenue Saving clause. Nm taxation and revenue   In most instances, a treaty does not affect the right of a country to tax its own residents (including those who are U. Nm taxation and revenue S. Nm taxation and revenue citizens) or of the United States to tax its residents or citizens (including U. Nm taxation and revenue S. Nm taxation and revenue citizens who are residents of the foreign country). Nm taxation and revenue This provision is known as the “saving clause. Nm taxation and revenue ”   For example, an individual who is a U. Nm taxation and revenue S. Nm taxation and revenue citizen and a resident of Canada may have dividend income from a U. Nm taxation and revenue S. Nm taxation and revenue corporation. Nm taxation and revenue The treaty provides a maximum rate of 15% on dividends received by a resident of Canada from sources in the United States. Nm taxation and revenue Even though a resident of Canada, the individual is a U. Nm taxation and revenue S. Nm taxation and revenue citizen and the saving clause overrides the treaty article that limits the U. Nm taxation and revenue S. Nm taxation and revenue tax to 15%. Nm taxation and revenue    Exceptions to the saving clause can be found in Article XXIX, paragraph 3. Nm taxation and revenue Treaty-based position. Nm taxation and revenue   If you take the position that any U. Nm taxation and revenue S. Nm taxation and revenue tax is overruled or otherwise reduced by a U. Nm taxation and revenue S. Nm taxation and revenue treaty (a treaty-based position), you generally must disclose that position on Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), and attach it to your return. Nm taxation and revenue Personal Services A U. Nm taxation and revenue S. Nm taxation and revenue citizen or resident who is temporarily present in Canada during the tax year is exempt from Canadian income taxes on pay for services performed, or remittances received from the United States, if the citizen or resident qualifies under one of the treaty exemption provisions set out below. Nm taxation and revenue Income from employment (Article XV). Nm taxation and revenue   Income U. Nm taxation and revenue S. Nm taxation and revenue residents receive for the performance of dependent personal services in Canada (except as public entertainers) is exempt from Canadian tax if it is not more than $10,000 in Canadian currency for the year. Nm taxation and revenue If it is more than $10,000 for the year, it is exempt only if: The residents are present in Canada for no more than 183 days in any 12-month period beginning or ending in the year concerned, and The income is not paid by, or on behalf of, a Canadian resident and is not borne by a permanent establishment in Canada. Nm taxation and revenue    Whether there is a permanent establishment in Canada is determined by the rules set forth in Article V. Nm taxation and revenue Example. Nm taxation and revenue You are a U. Nm taxation and revenue S. Nm taxation and revenue resident employed under an 8-month contract with a Canadian firm to install equipment in their Montreal plant. Nm taxation and revenue During the calendar year you were physically present in Canada for 179 days and were paid $16,500 (Canadian) for your services. Nm taxation and revenue Although you were in Canada for not more than 183 days during the year, your income is not exempt from Canadian income tax because it was paid by a Canadian resident and was more than $10,000 (Canadian) for the year. Nm taxation and revenue Pay received by a U. Nm taxation and revenue S. Nm taxation and revenue resident for work regularly done in more than one country as an employee on a ship, aircraft, motor vehicle, or train operated by a U. Nm taxation and revenue S. Nm taxation and revenue resident is exempt from Canadian tax. Nm taxation and revenue Income from self-employment (Article VII). Nm taxation and revenue   Income from services performed (other than those performed as an employee) are taxed in Canada if they are attributable to a permanent establishment in Canada. Nm taxation and revenue This income is treated as business profits, and deductions similar to those allowed under U. Nm taxation and revenue S. Nm taxation and revenue law are allowable. Nm taxation and revenue   If you carry on (or have carried on) business in both Canada and the United States, the business profits are attributable to each country based on the profits that the permanent establishment might be expected to make if it were a distinct and separate person engaged in the same or similar activities. Nm taxation and revenue The business profits attributable to the permanent establishment include only those profits derived from assets used, risks assumed, and activities performed by the permanent establishment. Nm taxation and revenue   You may be considered to have a permanent establishment if you meet certain conditions. Nm taxation and revenue For more information, see Article V (Permanent Establishment) and Article VII (Business Profits). Nm taxation and revenue Public entertainers (Article XVI). Nm taxation and revenue   The provisions under income from employment or income from self-employment do not apply to public entertainers (such as theater, motion picture, radio, or television artistes, musicians, or athletes) from the United States who receive more than $15,000 in gross receipts in Canadian currency, including reimbursed expenses, from their entertainment activities in Canada during the calendar year. Nm taxation and revenue However, this provision for public entertainers does not apply (and the other provisions will apply) to athletes participating in team sports in leagues with regularly scheduled games in both the United States and Canada. Nm taxation and revenue Compensation paid by the U. Nm taxation and revenue S. Nm taxation and revenue Government (Article XIX). Nm taxation and revenue   Wages, salaries, and similar income (other than pensions) paid to a U. Nm taxation and revenue S. Nm taxation and revenue citizen by the United States or any of its agencies, instrumentalities, or political subdivisions for discharging governmental functions are exempt from Canadian income tax. Nm taxation and revenue   The exemption does not apply to pay for services performed in connection with any trade or business carried on for profit by the United States, or any of its agencies, instrumentalities, or political subdivisions. Nm taxation and revenue Students and apprentices (Article XX). Nm taxation and revenue   A full-time student, apprentice, or business trainee who is in Canada to study or acquire business experience is exempt from Canadian income tax on remittances received from any source outside Canada for maintenance, education, or training. Nm taxation and revenue The recipient must be or must have been a U. Nm taxation and revenue S. Nm taxation and revenue resident immediately before visiting Canada. Nm taxation and revenue   An apprentice or business trainee can claim this exemption only for a period of one year from the date the individual first arrived in Canada for the purpose of training. Nm taxation and revenue Pensions, Annuities, Social Security, and Alimony Under Article XVIII, pensions and annuities from Canadian sources paid to U. Nm taxation and revenue S. Nm taxation and revenue residents are subject to tax by Canada, but the tax is limited to 15% of the gross amount (if a periodic pension payment) or of the taxable amount (if an annuity). Nm taxation and revenue Canadian pensions and annuities paid to U. Nm taxation and revenue S. Nm taxation and revenue residents may be taxed by the United States, but the amount of any pension included in income for U. Nm taxation and revenue S. Nm taxation and revenue tax purposes may not be more than the amount that would be included in income in Canada if the recipient were a Canadian resident. Nm taxation and revenue Pensions. Nm taxation and revenue   A pension includes any payment under a pension or other retirement arrangement, Armed Forces retirement pay, war veterans pensions and allowances, and payments under a sickness, accident, or disability plan. Nm taxation and revenue It includes pensions paid by private employers and the government for services rendered. Nm taxation and revenue   Pensions also include payments from individual retirement arrangements (IRAs) in the United States, registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) in Canada. Nm taxation and revenue   Pensions do not include social security benefits. Nm taxation and revenue Roth IRAs. Nm taxation and revenue   A distribution from a Roth IRA is exempt from Canadian tax to the extent it would be exempt from U. Nm taxation and revenue S. Nm taxation and revenue tax if paid to a U. Nm taxation and revenue S. Nm taxation and revenue resident. Nm taxation and revenue In addition, you may elect to defer any tax in Canada on income accrued within the Roth IRA but not distributed by the Roth IRA. Nm taxation and revenue However, you cannot defer tax on any accruals due to contributions made after you become a Canadian resident. Nm taxation and revenue Tax-deferred plans. Nm taxation and revenue   Generally, income that accrues in a Canadian RRSP or RRIF is subject to U. Nm taxation and revenue S. Nm taxation and revenue tax, even if it is not distributed. Nm taxation and revenue However, a U. Nm taxation and revenue S. Nm taxation and revenue citizen or resident can elect to defer U. Nm taxation and revenue S. Nm taxation and revenue tax on income from the plan until the income is distributed. Nm taxation and revenue Form 8891 is used to make the election. Nm taxation and revenue Annuities. Nm taxation and revenue    An annuity is a stated sum payable periodically at stated times, during life, or during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered). Nm taxation and revenue Annuities do not include: Non-periodic payments, or An annuity the cost of which was deductible for tax purposes. Nm taxation and revenue Special rules. Nm taxation and revenue    Special rules apply to pensions and annuities with respect to: Short-term assignments, Cross-border commuters, and Individuals who participate in a Canadian qualifying plan. Nm taxation and revenue Generally, distributions in such cases are deemed to be earned in the country in which the plan is established, without regard to where the services were rendered. Nm taxation and revenue Social security benefits. Nm taxation and revenue   U. Nm taxation and revenue S. Nm taxation and revenue social security benefits paid to a resident of Canada are taxed in Canada as if they were benefits under the Canada Pension Plan, except that 15% of the amount of the benefit is exempt from Canadian tax. Nm taxation and revenue Alimony. Nm taxation and revenue   Alimony and similar amounts (including child support payments) from Canadian sources paid to U. Nm taxation and revenue S. Nm taxation and revenue residents are exempt from Canadian tax. Nm taxation and revenue For purposes of U. Nm taxation and revenue S. Nm taxation and revenue tax, these amounts are excluded from income to the same extent they would be excluded from income in Canada if the recipient was a Canadian resident. Nm taxation and revenue Investment Income From Canadian Sources The treaty provides beneficial treatment for certain items of Canadian source income that result from an investment of capital. Nm taxation and revenue Dividends (Article X). Nm taxation and revenue   For Canadian source dividends received by U. Nm taxation and revenue S. Nm taxation and revenue residents, the Canadian income tax generally may not be more than 15%. Nm taxation and revenue   A 5% rate applies to intercorporate dividends paid from a subsidiary to a parent corporation owning at least 10% of the subsidiary's voting stock. Nm taxation and revenue However, a 10% rate applies if the payer of the dividend is a nonresident-owned Canadian investment corporation. Nm taxation and revenue   These rates do not apply if the owner of the dividends carries on, or has carried on, a business in Canada through a permanent establishment and the holding on which the income is paid is effectively connected with that permanent establishment. Nm taxation and revenue Interest (Article XI). Nm taxation and revenue   Generally, Canadian source interest received by U. Nm taxation and revenue S. Nm taxation and revenue residents is exempt from Canadian income tax. Nm taxation and revenue   The exemption does not apply if the owner of the interest carries on, or has carried on, a business in Canada through a permanent establishment and the debt on which the income is paid is effectively connected with that permanent establishment. Nm taxation and revenue Gains from the sale of property (Article XIII). Nm taxation and revenue   Generally, gains from the sale of personal property by a U. Nm taxation and revenue S. Nm taxation and revenue resident having no permanent establishment in Canada are exempt from Canadian income tax. Nm taxation and revenue However, the exemption from Canadian tax does not apply to gains realized by U. Nm taxation and revenue S. Nm taxation and revenue residents on Canadian real property, and on personal property belonging to a permanent establishment in Canada. Nm taxation and revenue   If the property subject to Canadian tax is a capital asset and was owned by the U. Nm taxation and revenue S. Nm taxation and revenue resident on September 26, 1980, not as part of the business property of a permanent establishment in Canada, generally the taxable gain is limited to the appreciation after 1984. Nm taxation and revenue Royalties (Article XII). Nm taxation and revenue   The following are exempt from Canadian tax: Copyright royalties and other like payments for the production or reproduction of any literary, dramatic, musical, or artistic work (other than payments for motion pictures and works on film, videotape, or other means of reproduction for use in connection with television, which may be taxed at 10%), Payments for the use of, or the right to use, computer software, Payments for the use of, or the right to use, any patent or any information concerning industrial, commercial, or scientific experience (but not within a rental or franchise agreement), and Payments for broadcasting as agreed to in an exchange of notes between the countries. Nm taxation and revenue   This rate or exemption does not apply if the owner of the royalties carries on, or has carried on, a business in Canada through a permanent establishment and the right or property on which the income is paid is effectively connected with that permanent establishment. Nm taxation and revenue   This exemption (or lower rate) does not apply to royalties to explore for or to exploit mineral deposits, timber, and other natural resources. Nm taxation and revenue Other Income Generally, Canadian source income that is not specifically mentioned in the treaty, may be taxed by Canada. Nm taxation and revenue Gambling losses. Nm taxation and revenue   Canadian residents may deduct gambling losses in the U. Nm taxation and revenue S. Nm taxation and revenue against gambling winnings in the U. Nm taxation and revenue S. Nm taxation and revenue in the same manner as a U. Nm taxation and revenue S. Nm taxation and revenue resident. Nm taxation and revenue Charitable Contributions United States income tax return. Nm taxation and revenue   Under Article XXI, you may deduct contributions to certain qualified Canadian charitable organizations on your United States income tax return. Nm taxation and revenue Besides being subject to the overall limits applicable to all your charitable contributions under U. Nm taxation and revenue S. Nm taxation and revenue tax law, your charitable contributions to Canadian organizations (other than contributions to a college or university at which you or a member of your family is or was enrolled) are subject to the U. Nm taxation and revenue S. Nm taxation and revenue percentage limits on charitable contributions, applied to your Canadian source income. Nm taxation and revenue If your return does not include gross income from Canadian sources, charitable contributions to Canadian organizations are generally not deductible. Nm taxation and revenue Example. Nm taxation and revenue You are a U. Nm taxation and revenue S. Nm taxation and revenue citizen living in Canada. Nm taxation and revenue You have both U. Nm taxation and revenue S. Nm taxation and revenue and Canadian source income. Nm taxation and revenue During your tax year, you contribute to Canadian organizations that would qualify as charitable organizations under U. Nm taxation and revenue S. Nm taxation and revenue tax law if they were U. Nm taxation and revenue S. Nm taxation and revenue organizations. Nm taxation and revenue To figure the maximum amount of the contribution to Canadian organizations that you can deduct on your U. Nm taxation and revenue S. Nm taxation and revenue income tax return, multiply your adjusted gross income from Canadian sources by the percentage limit that applies to contributions under U. Nm taxation and revenue S. Nm taxation and revenue income tax law. Nm taxation and revenue Then include this amount on your return along with all your domestic charitable contributions, subject to the appropriate percentage limit required for contributions under U. Nm taxation and revenue S. Nm taxation and revenue income tax law. Nm taxation and revenue The appropriate percentage limit for U. Nm taxation and revenue S. Nm taxation and revenue tax purposes is applied to your total adjusted gross income from all sources. Nm taxation and revenue Qualified charities. Nm taxation and revenue   These Canadian organizations must meet the qualifications that a U. Nm taxation and revenue S. Nm taxation and revenue charitable organization must meet under U. Nm taxation and revenue S. Nm taxation and revenue tax law. Nm taxation and revenue Usually an organization will notify you if it qualifies. Nm taxation and revenue For further information on charitable contributions and the U. Nm taxation and revenue S. Nm taxation and revenue percentage limits, see Publication 526, Charitable Contributions. Nm taxation and revenue Canadian income tax return. Nm taxation and revenue   Under certain conditions, contributions to qualified U. Nm taxation and revenue S. Nm taxation and revenue charitable organizations may also be claimed on your Canadian income tax return if you are a Canadian resident. Nm taxation and revenue Income Tax Credits The treaty contains a credit provision (Article XXIV) for the elimination of double taxation. Nm taxation and revenue In general, the United States and Canada both allow a credit against their income tax for the income tax paid to the other country on income from sources in that other country. Nm taxation and revenue For detailed discussions of the U. Nm taxation and revenue S. Nm taxation and revenue income tax treatment of tax paid to foreign countries, see Publication 514, Foreign Tax Credit for Individuals. Nm taxation and revenue See paragraphs (4) and (5) of Article XXIV for certain provisions that affect the computation of the credit allowed by the United States for Canadian income taxes paid by U. Nm taxation and revenue S. Nm taxation and revenue citizens residing in Canada. Nm taxation and revenue Competent Authority Assistance Under Article XXVI, a U. Nm taxation and revenue S. Nm taxation and revenue citizen or resident may request assistance from the U. Nm taxation and revenue S. Nm taxation and revenue competent authority when the actions of Canada, the United States, or both, potentially result in double taxation or taxation contrary to the treaty. Nm taxation and revenue The U. Nm taxation and revenue S. Nm taxation and revenue competent authority may then consult with the Canadian competent authority to determine if the double taxation or denial of treaty benefits in question can be avoided. Nm taxation and revenue If the competent authorities are not able to reach agreement in a case, binding arbitration proceedings may apply. Nm taxation and revenue It is important that your request for competent authority assistance be made as soon as you have been notified by either Canada or the United States of proposed adjustments that would result in denial of treaty benefits or in double taxation. Nm taxation and revenue This is so that implementation of any agreement reached by the competent authorities is not barred by administrative, legal, or procedural barriers. Nm taxation and revenue For information that you should include with your request for competent authority assistance, see Revenue Procedure 2006-54, 2006-49 IRB 1035, available at www. Nm taxation and revenue irs. Nm taxation and revenue gov/irb/2006-49_IRB/ar13. Nm taxation and revenue html. Nm taxation and revenue The request should be addressed to:  Deputy Commissioner (International) Large Business and International Division Attn: Office of Tax Treaty  Internal Revenue Service 1111 Constitution Ave. Nm taxation and revenue , NW Routing: MA3-322A Washington, D. Nm taxation and revenue C. Nm taxation and revenue 20024 In addition to a timely request for assistance, you should take the following measures: File a timely protective claim for credit or refund of U. Nm taxation and revenue S. Nm taxation and revenue taxes on Form 1040X, Form 1120X, or amended Form 1041, whichever is appropriate. Nm taxation and revenue This will, among other things, give you the benefit of a foreign tax credit in case you do not qualify for the treaty benefit in question. Nm taxation and revenue For figuring this credit, attach either Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), or Form 1118, Foreign Tax Credit — Corporations, as appropriate. Nm taxation and revenue Attach your protective claim to your request for competent authority assistance. Nm taxation and revenue Take appropriate action under Canadian procedures to avoid the lapse or termination of your right of appeal under Canadian income tax law. Nm taxation and revenue How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS and the Canada Revenue Agency in several ways. Nm taxation and revenue Text of Treaty You can get the text of the U. Nm taxation and revenue S. Nm taxation and revenue —Canada income tax treaty from: Superintendent of Documents U. Nm taxation and revenue S. Nm taxation and revenue Government Printing Office P. Nm taxation and revenue O. Nm taxation and revenue Box 371954 Pittsburgh, PA 15250-7954 The treaty can also be found on the Internet at IRS. Nm taxation and revenue gov. Nm taxation and revenue U. Nm taxation and revenue S. Nm taxation and revenue Taxation During the filing season, the IRS conducts a taxpayer assistance program in Canada. Nm taxation and revenue To find out if IRS personnel will be in your area, you should contact the consular office at the nearest U. Nm taxation and revenue S. Nm taxation and revenue Embassy or consulate. Nm taxation and revenue Mail. Nm taxation and revenue For answers to technical or account questions, you can write to:   Internal Revenue Service International Section Philadelphia, PA 19255-0525 Phone. Nm taxation and revenue You can call the IRS for help at (267) 941-1000 (not a toll-free call). Nm taxation and revenue Canadian Taxation You can get information on Canadian taxation from the Canada Revenue Agency. Nm taxation and revenue The International Tax Services Office can be contacted on 1-800-267-5177 (from anywhere in Canada and the U. Nm taxation and revenue S. Nm taxation and revenue ) or on the Internet at www. Nm taxation and revenue cra-arc. Nm taxation and revenue gc. Nm taxation and revenue ca. Nm taxation and revenue Prev  Up  Next   Home   More Online Publications
Español

Contact Your Government

Contact information for U.S. government programs, departments, and agencies.

Contact USA.gov

If you have questions about USA.gov or about any other government program, please contact us. We'll answer your e-mails and phone calls in English or Spanish.

Contact the Government

If you didn't find the answers to your question in our frequently asked questions pages, please contact the government directly.

Frequently Asked Questions

  • Governmentwide FAQs  – Search our database of the 2000+ most frequently asked questions about government programs and services.
  • FAQs by Agency and Program  – Browse our directory of frequently asked question pages from agencies and programs throughout the federal government.

The Nm Taxation And Revenue

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