Collection of deferred Social Security tax begins Jan. 1

  • Published
  • By Amy Rollins
  • Skywrighter Staff

WRIGHT-PATTERSON AIR FORCE BASE, Ohio — The tax collector is coming early in 2021.

Paychecks of both military and civilian personnel at Wright-Patterson Air Force Base and throughout executive branch agencies will be smaller starting Jan. 1 through April.

In an effort to provide temporary relief during the COVID-19 pandemic, the 6.2% Social Security payroll tax (Old Age, Survivors and Disability Insurance, or OASDI) was deferred this summer, in response to a presidential memorandum issued Aug. 8, and Internal Revenue Service guidance Aug. 28.

“Please know that come January until April, employees will have to pay back their deferred 2020 taxes, plus pay the normal 2021 taxes,” said Lt. Col. Joshua Wolfram, 88th Comptroller Squadron commander.

The Defense Finance and Accounting Service implemented system changes to defer withholding of Social Security wages for employees under the wages threshold and subject to Social Security tax.

DFAS deferred OASDI for all personnel whose gross taxable wages were less than $4,000 in any given pay period through the end of 2020 (for military members this was calculated on a monthly rate of basic pay that was less than $8,666.66 in any given month).

Elimination of employee-deduction withholding for applicable employees went into effect the second paycheck of September. For civilians it was the pay period ending Sept. 12 that paid out Sept. 18. For military members, it took effect in Sept. 15 paychecks.

Furthermore, DFAS also sent out a SMART DOC to all employees Sept. 9 informing them of the change.

The 2020 deferred amount of OASDI is scheduled to be collected by the IRS between Jan. 1 and April 30, in addition to the normal withholding of 2021 FICA-Social Security taxes.

Here is an example (military):

  • In 2020, a staff sergeant with more than eight years of service earns a base pay of $3,306.
  • In 2021, the same staff sergeant will earn a base pay of $3,405 (per annual raises proposed in the new National Defense Authorization Act)
  • $3,306 X 6.2% = $204.97 (2020)
    $3,405 X 6.2% = $211.11 (2021)

Deductions for Social Security will be $416 per month for January to April.  

More information is forthcoming from DFAS. The IRS is still working to determine how the deferral and collection will impact employee W-2s.

Key facts:

  • The Social Security tax is labeled as “FICA-SOC SECURITY” on the Leave and Earnings Statement and calculated as 6.2% of basic pay.
  • This change is effective through the end of 2020 and only applies to your Social Security tax withholding. Normal withholding of your FICA-Social Security taxes will resume effective Jan. 1.
  • The deferral happened automatically. No payroll providers, departments/agencies or employees were able to opt in/opt out.
  • The 2020 deferral payback amount will be different than the 2021 tax withdrawal if an annual pay raise is approved.
  • Additional information on the collection process will be provided in the future.
  • If a member separated or retired in 2020 before the Social Security tax can be collected in 2021, they are still responsible for the Social Security tax repayment.

Airman & Family Readiness Center personnel available

For people who may have concerns about the tax repayment and how it will affect their finances, they are encouraged to make an in-person or virtual appointment with Airman and Family Readiness Center personnel, said Dawn Ivy, community readiness specialist and personal financial management team lead. Military members, civilians and contractors are welcome to utilize services.

“I suggest people come get a comprehensive budget done, see where their money is going and how they can redirect it,” she said.

The AFRC may be reached at 937-257-3592. Virtual consultations using Zoom and FaceTime are making more budget-related appointments available, Ivy added.

“During the COVID-19 pandemic, we’ve not only been spending the Social Security money that we have to pay back, but we’ve been at home doing a lot of online shopping,” she said. “Why not start 2021 out by coming in, doing a budget, seeing how you can clean up your credit and doing what you need to do to make yourself financially stable? See where your money is going and set your mind at rest. We can help you go forward in 2021.”

AFRC can provide grocery shopping tips, for example.

“You may have been ordering groceries online, having them put in the car and not really making up menus,” Ivy said. “You may not even sit down and look at what you need in your cabinets. Maybe you can save $50 on groceries. Or did you get a bunch of Starbucks gift cards for Christmas? You could use those instead of buying coffee somewhere else.”

For more information

As more information becomes available, it will be posted on:

  • DFAS website: www.dfas.mil/taxes/Social-Security-Deferral/
  • The presidential memorandum is available at www.whitehouse.gov/presidential-actions/memorandum-deferring-payroll-tax-obligations-light-ongoing-covid-19-disaster.
  • For questions and concerns about pay, Wolfram is directing military members and civilians at Wright-Patt to email 88 CPTS customer service representatives at payhelp@us.af.mil.
  • Additional information will be posted to myPers at https://mypers.af.mil/ It will also be loaded to Civilian One Link.

For financial readiness, visit:

  • https://finred.usalearning.gov/
  • Airman and Family Readiness Center and speak with a personal financial manager or counselor
  • Military OneSource at www.militaryonesource.mil.

 

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          Wright-Patterson AFB, OH 45433