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Collect back and pay the Employee Social Security Deferral in QuickBooks

Learn how to collect and pay the Employee Social Security Deferral with QuickBooks payroll products.

If you have QuickBooks Payroll or Intuit Payroll, and deferred Social Security for your employees as outlined in the Presidential Memorandum, you must collect and pay the taxes to the Internal Revenue service.

The collection of the deferred taxes should begin January 1, 2021, and end on December 31, 2021. All taxes must be paid by December 31, 2021.

*Per the IRS Guidance, interest, penalties, and additions to tax will begin to accrue on January 1, 2022.

For more information see:

Follow the steps for your payroll service.

Note: Not sure which payroll service you have? Here's how to find which payroll service you have.

Step 1: Check how much Social Security you've deferred

  1. Go to Reports and scroll down to Payroll.
  2. Select Payroll Summary by Employee.
  3. From the Date Range dropdown select Last Year.
  4. In the Employee dropdown choose All Employees.
  5. In the Work Location dropdown choose All Work Locations.
  6. Display columns by Employee.
  7. Select Run Report.
  8. In the row EE SS Deferral Credit will be the total for each employee.
  1. Go to Reports, then Employees and Payroll, then select More payroll reports in Excel, then Payroll Summary by Tax Tracking Type.
  2. Under Dates choose Last Year then select Get QuickBooks Data.
  3. Select on the Tax Tracking Type dropdown in row 2, clear all and only select the Employee Social Security Deferral item. Select OK.
  4. The amounts will show total Employee Social Security deferred, double-click on the amount to see the breakdown by employee.
  1. Go to Reports and select Payroll Details.
  2. For the Range dropdown, choose Last Year.
  3. For the Locations dropdown, choose All Locations.
  4. For Checks dropdown, choose All Checks.
  5. For each employee who had Social Security deferred will have an entry listed as EE SS Deferral Credit. This negative credit amount is the amount the employee deferred

Step 2: Collect the deferred Social Security amount back from the employee

  1. Select Payroll then Employees.
  2. Select the employee's name.
  3. Select Edit ✎ next to Pay.
  4. In the Does [employee] have any deductions section?, select + Add a new deduction , or + Add deductions.
  5. From the Deductions/contribution ▼ dropdown, choose New deduction/contribution.
  6. In Deduction/contribution type ▼ dropdown, choose Other deductions.
  7. In the Type ▼ dropdown, choose Other after tax deductions.
  8. In the Description enter: EESS Deferral Repay or enter a name of your choice.
  9. In the Amount per pay period section, enter the repayment amount per paycheck
    • We suggest you talk with your employee to decide the repayment schedule that works for them. Keep in mind the total has to be paid to the IRS by December 31, 2021.
  10. In the Annual maximum section enter the total amount the employee deferred. This will make sure once this total amount is collected, the deductions will end.
  11. Select OK, then Done.
  12. Repeat these steps for each employee who elected to defer their Social Security.
  1. Go to the Employees menu, then Manage Payroll Items, then select New Payroll Item.
  2. Select Custom Setup, then select Next.
  3. Select Deduction, then select Next.
  4. Enter a name such as EE Social Security Repay, then select Next.
  5. In the Agency for company-paid liability window, find the Agency field. Choose Internal Revenue Service or IRS from the ▼ dropdown.
  6. In the Enter the number that identifies you to the agency field, enter your federal EIN.
  7. Select Payroll Liabilities in the Liability account ▼ dropdown, then select Next.
  8. Select None from the ▼ dropdown.
  9. Select Next twice.
  10. In the Calculate Based on Quantity window, select Neither, then select Next.
  11. Select Net pay, then select Next.
  12. Select Finish.
  13. You can now add this item to the employee profile so it will automatically appear on each paycheck
    1. Go to Employees then select Employee Center.
    2. On the Employee tab double-click the employee name.
    3. Select the Payroll Info tab.
    4. Under Additions, Deductions, and Company Contributions, add the repay item.
    5. In Amount enter the repayment amount per paycheck.
      • We suggest you talk with your employee to determine the repayment schedule that works for them. Keep in mind the total has to be paid to the IRS by December 31, 2021.
    6. In Limit enter the total amount the employee deferred. This will ensure once this total amount is collected, the deductions will end.
    7. Select OK.
  1. Go to Employees and select an affected employee.
  2. On the Deductions & Contribution select Edit.
  3. Select +Add Deduction.
  4. In the Category dropdown, select Other Deductions.
  5. In the Type dropdown, select Other after tax deductions.
  6. In the description enter EESS Deferral Repay or enter a description of your choice
  7. In the Amount Per Period dropdown, select $ Amount and enter the repayment amount per paycheck.
    • We suggest you talk with your employee to determine the repayment schedule that works for them. Keep in mind the total has to be paid to the IRS by December 31, 2021.
  8. In the Annual maximum section enter the total amount the employee deferred. This will ensure once this total amount is collected, the deductions will end.
  9. Select Save then OK.
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to collect the deferred Social Security amount back from the employee.

Step 3: Pay the IRS

After you've collected the deferred amount, you must pay it to the IRS directly.

  1. If you aren't already enrolled with the IRS EFTPS, you will need to enroll in EFTPS with the IRS.
  2. Login to the EFTPS with your EIN, your PIN , and Internet Password.
  3. Remember, when paying you will select the tax period the taxes were accrued in.
  4. You must schedule payments by 8 PM ET the day before the due date to be considered timely with the IRS.
  5. Record the payment in your QuickBooks:

Step 4: Create a W-2c for your employees

Once the full amount of the employee deferred portion of Social Security has been collected and paid, the employee should have a corrected W-2.  For additional details see Form W-2 Reporting of Employee Social Security Tax Deferred under Notice 2020-65.  Follow this article to learn how to correct W-2s Fix an incorrect W-2.

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