SL 80001.845 Reporting Back Pay to SSA
Back pay is pay received in one period for actual or deemed employment in an earlier period. For Social Security coverage and benefit purposes, all back pay, whether or not under an appropriate statute, is wages if it constitutes remuneration paid for covered employment. Amounts determined to be damages for personal injury, interest, penalties, or legal fees, paid in conjunction with back pay awards are not wages. The employee need not have worked during the period in question for a back pay award to be considered wages. If a back pay wage award is not under a statute, SSA credits back pay as wages in the year paid. Back pay not under a statute cannot be allocated to prior periods. However, if the back pay was awarded under a statute, SSA credits the back pay award to the year(s) it should have been paid.
For information on how to report back pay under a statute to IRS and SSA, obtain a copy of IRS Publication No. 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration. This is available on the IRS web site at www.irs.gov.