Got IRS CP11 notice about incorrect Social Security Tax

[mpodkolzin]

I recently got IRC CP11 notice claiming that social security tax excess withheld (schedule 3 line 11 - Excess social security and tier 1 RRTA tax withheld) was calculated incorrectly and therefore I owe ~2k

W2s were imported automatically (and double confirmed manually) so It's not the data entry error.

The question is - what can be the reason? Incorrect Turbotax calculations or employers put incorrect data on W2? 

Is it something Turbotax support is supposed to help with?

Thanks!

Max

[Mike9241]

we can't see the w-2s or your return.  if an employer over withheld, Turbotax should not have given you a credit. you would have to get back the excess from the employer.

sometimes the problem can be where there is a w-2 along with self-employment income, the taxpayers miss noting that the w-2 is for the spouse resulting in Turbotax calculating excess Social Security.

contact Turbotax support.

[RaifH]

Depending on the year the notice is for, 6.2% of your wages up to a maximum of somewhere in the neighborhood of $140,000 should be withheld for social security. 

If one employer messes up the math or over-withholds, you do not enter this on your tax return. Instead, the employer should give you a refund of the excess social security tax withheld. For example, if you worked the entire year for Employer A and you earn $220,000 and rather than ceasing to withhold Social Security taxes after your wages surpassed the limit, they kept withholding, you would have to get a refund of the excess withheld from your employer.  

On the other hand, if you worked for more than one employer and you had social security tax over-withheld because one employer did not know how much the other employer withheld, that would be refunded to you on Schedule 3, Line 11. So if Employer A correctly withheld 6.2% of your $100,000 salary for Social Security and Employer B also correctly withheld 6.2% of your $120,000 salary, it would lead to an over-withholding that would be refunded on your tax return.

Sometimes, you receive 2 W-2s because you transfer within the company or work for two companies that are subsidiaries of the same parent company. In this case, you may get over withheld because of the second situation. However, the IRS thinks you should get it back from the employer because, according to the EIN on the W-2s, they are the same company. Therefore, they will not include it in your tax refund. If that is the situation, you may have to talk to your employer to see if they can get it sorted out. 

[xmasbaby0]

@mpodkolzin You have not mentioned what tax year this is for.    The first thing you need to do is check and see if you entered all of the W-2's under only one name on a joint return.   If you did that it could cause you to get an artificially high refund and now the IRS wants it back.

When you enter all of the W-2 income under only one name on a joint return.  The IRS refunds the “excess” Social Security.  Now they have matched your W-2’s to the return and they want that money back.

You should always save your own W-2’s for your records—now you need to look at them to check.  Look at your W-2 Box 4  What does it say?  Is it more than the maximum for the tax year?

2016  Maximum $7347      2017 Maximum $7886  2018 $7960.80

2019 $8239.80   2020  $8537.40

Check the worksheets from your tax return to see if you entered all of the W-2 income for both spouses under only one of the names on a joint return.  That is the most common reason for this problem.  Unfortunately, it is user error.  As you prepare your return, several screens alert you to it. 

And if you did in fact make the mistake of entering all of the income for your W-2’s under only one spouse’s name, you may have made that same mistake on the next year’s tax return if you transferred all your data over from the past year to the next.  Check to see—before you get another IRS letter.

On your 2020 return if you had excess Social Security i flows from Schedule 3 to line 31 of your Form 1040

[mpodkolzin]

thanks a lot for your response!

I should have specified, it's 2021 Tax return.

I imported (I did not even enter it manually) W2 for both of us individually; now I went ahead and manually calculated taxable income and social security tax withheld and TurboTax calculation seems to be correct!

Is it possible the IRS got something miscalculated on their end?

[RobertB4444]

@mpodkolzin  It is always possible that the IRS got something incorrect.  They should have sent you some of their math on the notice you received.  If it is wrong then write them a letter instead of sending a check.