Uncollected Social Security Tax

[whyland]

I have had the maximum social security tax withheld from my employer. A previous employer with whom I still hold a group universal life policy send me a W2 with an amount of $44 listed in Box 12 Letter Code M (uncollected SS tax). TurboTax is adding this $44 to my tax liability even though I am, as I already stated, at the maximum. Why is it doing this? Is it a bug or am I not understanding the tax law?

[JohnW152]

No, this isn't a bug, this is a legitimate tax.

For group-term life insurance coverage provided to former employees, former employees have to pay the employee part of social security and Medicare taxes on the taxable cost of group-term life insurance over $50,000 on Form 1040 or 1040-SR. 

The employer is not required to collect those taxes.  However, the employer must report the uncollected social security tax with code M in box 12 of Form W-2.

Please see Group-term life insurance in the General Instructions for Forms W-2 and W-3 for more information.

[whyland]

Perhaps I have not made myself clear on this one:

- I have already had the maximum social security tax withheld by my current employer

- My former employer from whom I have a group life policy sent me a W2 with Box 12 Letter Code M indicating that there is about $44 of uncollected social security tax. I do understand that collecting social security tax on this imputed income is legitimate.

- However, the TurboTax product is adding this uncollected social security tax on to my tax obligation. Essentially, I will be paying $44 more than the maximum social security tax the way that TurboTax is handling this.

- Everything I have read indicates that in 2020 the maximum social security tax is $8,537.40 - the same amount my current employer has already withheld. TurboTax will have me paying $8581.40 by adding this $44 rather than recognizing that I am already at the maximum.

- How do I know this? I went into TurboTax and zero'd out the amount in Box 12 Letter Code M on my former employer's W2 and my refund increased by this $44 amount.

[DawnC · Accepted solution]

Form 843 is not supported in TurboTax.   You will need to pay the tax and then file Form 843 to get a refund of that tax.   You can mail it in separately and the instructions are included in the link.   If the tax had been in Box 4, TurboTax could handle your situation and add credit the tax on your return.   But in this rare case, you will need to file the 843.