2

OK, So I am having a bit of an issue getting a response from our payroll department at work and Google is useless in regards to this question.

I work for the local county and we do not have Social Security taken out of our paychecks. In place of that we are contributing to a 457B plan (basically a 401K). My question is how do I claim this on my year end taxes? The 457B is easy, that is just a retirement plan and claimed as such, it's the fact that my Social Security withheld is 0.00. Do I just claim 0 for SS or is there an additional form that needs to be filled out due to this?

I have never had to pay to have my taxes done for me in the past and hate to start now :) This seems like a straightforward question and there is a ton of information available on 457B plans but nothing related to how they are claimed on year end taxes and how to deal with no Social Security withheld.

  • Where do you claim any Social Security (or Medicare) taxes paid on your 1040 income tax return? If the employer did not withhold SS tax and the W-2 form reported SS wages of $0, then you don't need to pay SS tax on that income and you don't report anything. If you had two employers who separately withheld SS tax, you may have had too much SS tax withheld (this happens if the total income subject to SS tax exceeds about $113K, if I remember correctly), and the excess SS tax withheld will reduce the income tax due with your return, or increase your refund. – Dilip Sarwate Mar 8 '13 at 22:38
1

Are you getting a W2? Is your employer SS-exempt? If so, then there's nothing to report.

It is my understanding though that you can only be exempt from SS taxes if you're covered by a public pension, not 457b plan. But I may be wrong on this. Correction: As Chris quoted below from the IRS Guide for Public Employers (page 5), having a mandatory 457b qualifies as well (emphasis added by me):

In order for a defined contribution retirement system to be considered a qualified plan , the worker must be covered in a plan in which , generally, at least 7.5% of his/her compensation is credited to a retirement plan account on his or her behalf . This contribution can be any combination of employer and employee contributions, but must total a minimum of 7.5% of pay, and cannot include any credited interest in the calculation. The system may include any plan described in section 401(a), an annuity plan or contract under section 403(b) or a plan described in section 457(b) or (f) of the Internal Revenue Code.

I suggest you do get a professional advice, at least for the first year you work for the county, after that it would probably just be changing the numbers on the previous year return.

  • A 457b plan with mandatory 7.5%+ contributions can be considered a "qualified public retirement system" and operate in lieu of Social Security. Doesn't have to be a defined benefit plan. See point "3. Public Retirement System" on page 5 of the IRS' Quick Reference Guide for Public Employers (PDF) – Chris W. Rea Mar 8 '13 at 21:18
  • @Chris yeah, I figured there's probably some exception. Makes sense, as long as its mandatory. – littleadv Mar 8 '13 at 21:21
  • "I suggest you do get a professional advice, at least for the first year you work for the county" I am thinking that this is the way to go. Everyone that I talk to has no clue and everyone has something different to say. To be honest, I am not even sure that anyone knows at the county exactly what to do. It looks like there might just be too many variables to take into account for my first filing with this employer. I'm thinking that this is the correct answer but will leave it unmarked for a bit to allow additional potential comments / answers. – m.j.b Mar 8 '13 at 21:45

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.