Correcting SS tax withholding
NIKA Howard
via web
Our tax tables didn't get updated timely when the Social Security tax rate changed last year so we over-deducted Social Security taxes on an employee. We've reimbursed him for the difference but his W2 is incorrect now.
How can we correct the amount of SS withheld on this employee? AE won't allow a zero check, so I can't seem to adjust it using the paycheck function.
We're using Account Edge Pro.
2 Posted by Dan R on 24 Jan, 2012 06:18 AM
AE will let you create zero checks and then void them, but the data on them still applies. What you can't do is create negative checks.
I am assuming you paid the employee back in cash or a spend money transaction and not through a paycheck process which would have been better and is still doable as a fix. Open your 2011 payroll copy of the books and create a paycheck for this employee (dated 12.31.2011). Change the check # to something like ADJSS as you are not printing this to be cashed. Zero out any amounts to start with and then enter the over deducted amount on the employee SS line as a POSITIVE number (you are adding it back not withholding more). The amount you entered should show as the amount being paid on the check. Recording it should correct the employees W2 and should not change the gross wages. This should also fix your 941/944 etc produced from those 2011 payroll books. If you have not accounted for the overpayment it should result in an amount to be refunded to you on the 941/944.
:-)
Dan
3 Posted by Lani on 26 Jan, 2012 05:35 PM
I have a similar problem. Our employees have overpaid their SS due to the change to the tax rate in January 2011. I am process W2s how do we handle this issue??
4 Posted by Dan R on 26 Jan, 2012 07:44 PM
If there are many it may be best to let the employees claim it as excess payment. This website talks about it: http://www.bankrate.com/finance/money-guides/recovering-excess-fica...
It is problematical because you are dealing with 2011 Payroll Books to create the W2s and any adjustments you do there are not going to be reflected in your current books. Combine that with what liabilities you have already paid etc... You may want to ask a tax professional or even the IRS.
If the employees are to claim it, you probably should give each a statement of some sort with the total excess and where to look on their tax form instructions for credit for the overpayment.
:-)
Dan
5 Posted by lanischooler on 27 Jan, 2012 09:55 PM
Thank You !