Unusual Circ*mstance Causing Overpayment of Social Security Taxes (2024)

‎March 7, 20237:33 AM

@madel21

OK...found it. (Desktop software only....cannot be done in the "Online" software)

After putting your W-2 forms in....one as a "Pay Agent for..." and then working out to the main menu...(making note of exactly what $ amount the software says was excess.....rounding can affect this number)

1) Switch to "Forms Mode"

2) open the "1040/1040SR Wks"

3) Scroll waaaay down to the Schedule 3 area.

4) enter the excess SS over $9114 into the box, just above Part II, box 11 as shown in the picture below:

____________________

I "think" this will allow e-filing, as long as it passes all other software error checks for yoru tax return as a whole.

And, make sure you keep "printed" copies of your W-2 forms in a tax folder....the IRS might send a letter asking for copies of the W-2 forms as proof...but they may not as they will also be getting electronically-filed copies of their employee's W-2 forms from your employer(s) (...but sometimes it takes a few months to a year for those to get matched up)

___________________

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

Since your both employers are represented by the same EIN number, you cannot claim the excess Social Security on your tax return.

"Employer's error - If any one employer withheld too much Social Security, Tier 1 RRTA tax, or Tier 2 RRTA tax, you can't claim the excess as a credit against your income tax. Your employer should adjust the excess for you. If the employer doesn't adjust the overcollection, you can use Form 843, Claim for Refund and Request for Abatement to claim a refund.

Two or more employers - If you had more than one employer during the taxable year and your total wages and compensation were over the wage base limit for the year, the total Social Security tax or Social Security equivalent Tier 1 RRTA tax withheld may have exceeded the maximum amount due for the tax year. If you had more than one railroad employer, and your total compensation was over the maximum amount of wages subject to Tier 2 RRTA, the total Tier 2 RRTA tax withheld may have exceeded the maximum due for the tax year.

• If you had more than one employer and too much Social Security tax or Tier 1 RRTA tax withheld, you may be able to claim the excess as a credit against your income tax on your income tax return. Refer to “Excess Social Security and Tier 1 RRTA Tax Withheld” in the Instructions for Form 1040 (and Form 1040-SR)for more information.
• You may be entitled to a refund if you paid excess Tier 1 RRTA tax over the Tier 1 RRTA compensation base or if you paid excess Social Security tax over the Social Security wage base. The RRTA compensation base and Social Security wage base limits are separate and stand alone.
• If you had more than one employer and too much Tier 2 RRTA tax withheld, you may request a refund of the excess Tier 2 RRTA tax using Form 843PDF. Attach copies of your Forms W-2, Wage and Tax Statement for the year to Form 843."

Topic No. 608 Excess Social Security

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The advice does not align with what I was told by the company. They indicated that I need to file a Schedule 3, which TurboTax does not seem to include. My company reports that they have an active Form 2678 on file with the IRS and files as "Agent for" for a number of business entities. ("Agent for" is included in line 2 of the company's name). They are required to restart FICA-OA in accordance with IRS regulation 301.7701-2(c)(2)(iv). Thus, they are unable to refund the over-withheld FICA-OA directly as they are not able to reclaim the employer contribution to FICA-OA.

It appears TurboTax does not allow for this situation and that I will have to file via paper. Is this true, or can TurboTax be updated this season to handle it?

TurboTax does support Form 1040, schedule 3, Additional Credits and Payments. I believe the entry you are mentioning would be on line 11 Excess Social Security and tier 1 RRTA tax withheld. However, that entry would come from your W-2 entry and would be populated automatically based on that entry.

If you are confident that you are correct as far as receiving the refund of excess social security taxes on your form 1040 as opposed to receiving it from your employer, a work-around solution would be to enter a different federal ID number on one of the W-2 forms and then mail your tax return in. However, this would void your TurboTax accuracy guarantee since you would be entering false information in TurboTax.

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Thanks Thomas. My company indicated that they are required by the IRS to use the same EIN as I explained before. They also indicated that tax software keying off the EIN does not recognize the name difference when a company acts as an "Agent for...". Thus, their recommendation is not to file electronically, but to submit by mail, with highlighting on the name difference and providing the rationale they gave me. (See previous post). They do this for more than one hundred employees each year since it is common for employees to transfer among the various business units.

The last time I transferred to a different business unit was about 5 years ago and TurboTax correctly handled the over payment (two W2s, same EIN, different names). Perhaps they can do it once again.

@madel21

TTX used to handle it a number of years ago...but I think (wild guess) they may have removed it because more folks were screwing up their filings.....using the Agent route when they were not supposed to.....than there were people who were validly in this situation.

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Those using "desktop/download" software can still fix it in their tax forms, but I don't know if it will prevent E-filing or not. I can give directions on how, when I get to my computer where I have those directions, later this morning.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

@madel21

OK...found it. (Desktop software only....cannot be done in the "Online" software)

After putting your W-2 forms in....one as a "Pay Agent for..." and then working out to the main menu...(making note of exactly what $ amount the software says was excess.....rounding can affect this number)

1) Switch to "Forms Mode"

2) open the "1040/1040SR Wks"

3) Scroll waaaay down to the Schedule 3 area.

4) enter the excess SS over $9114 into the box, just above Part II, box 11 as shown in the picture below:

____________________

I "think" this will allow e-filing, as long as it passes all other software error checks for yoru tax return as a whole.

And, make sure you keep "printed" copies of your W-2 forms in a tax folder....the IRS might send a letter asking for copies of the W-2 forms as proof...but they may not as they will also be getting electronically-filed copies of their employee's W-2 forms from your employer(s) (...but sometimes it takes a few months to a year for those to get matched up)

___________________

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*