Had two jobs but one W2 since employers used a PEO. Had too much social security withheld. TT won't let me amend Line 11/Sched3 since it thinks it's one job. How to fix?

[DawnC]

You will need to follow the instructions for the one employer situation.  If you can't get the company to refund it, you can manually change the amounts on your W-2 and fill out Form 843 and request a refund from the IRS.  See the instructions below under What if my employer can't cooperate.  

Your employer is supposed to withhold 6.2% of your Social Security Wages (the Box 3 amount on your W-2), up to a maximum of $8,239.80 per taxpayer for the tax year 2019.  If one employer withheld too much Social Security tax, you won't be able to take a credit for the excess on your tax return.

So, if your employer withheld too much, contact them and ask for:

1. A refund for the excess amount, and
2. A corrected W-2 (also called a W-2c) which shows the correct Box 3 and Box 4 amounts.

Do not file with excess withholdings on your return, as you may be subjected to penalties and interest.

What if my employer can't—or won't—cooperate?

You can correct the Box 4 amount yourself before filing. Simply multiply the amount in Box 3 by a factor of 0.062 and enter that amount or 8,239.80 (whichever is less) in Box 4.

To get a refund for the excess withholding, fill out IRS Form 843: Claim for Refund and Request for Abatement according to the Form 843 Instructions and mail it in separately. Make a copy to keep with your tax return paperwork.

[Kawh]

Hi.

Thank you for your response. Let me clarify. There are two employers despite only having one W-2. This is because they both used the same PEO - Justworks. It seems that neither employer can cooperate because they both did the right thing, with neither withholding more than the maximum. However, Turbotax insists that I follow the instructions for a single employer presumably because it only sees one W-2. Is there a way to override Turbotax so that we follow the instructions for two employers?

Thank you

[BillM223]

Whose EIN is on your W-2? Justworks'? 

Normally, a PEO (Professional Employer Organization) handle the personnel as their own employees. Since that is the case, the IRS (correctly) considers that you have only one employer - Justworks.

In this case, the IRS will not accept the request to refund the request to refund the excess SS tax through your tax return, and neither will TurboTax. In the past, the IRS has sent letters to taxpayers who claimed the refund of excess Social Security taxes on their return when the "two" employers had the same EIN; these letters told the taxpayers to go back to their employer(s) and get the refund from them.

TurboTax used to have a mechanism to allow an employee with two employers under one EIN to get the refund in the tax return, but since the IRS cracked down on the practice, TurboTax has removed that feature.

This is a Justworks' problem, and you need to explain to them that if you are considered an employee of Justworks (that is why I asked about whose EIN is on the W-2), then it is Justworks' problem to fix. 

Otherwise, your only alternative to do as Dawn says and file a form 843 with the IRS.

You might note to the Justworks HR people, that the instructions for line 7 of form 843 say "Explain in detail your reasons for filing this claim and show your computation for the credit, refund, or abatement. If you attach an additional sheet(s), include your name and SSN or employer identification number (EIN) on it. Also attach appropriate supporting evidence." (see Form 843 Instructions). 

In other words, if Justworks is your employer of record and they will not fix the problem, then you will, in the course of filing form 843 as is your right, be forced to explain to the IRS just why you are in this situation, thus bringing Justworks' behavior to the eyes of the IRS.

[Kawh]

Hi BillM223,

Thank you for your thorough response. Do you have any suggestions on where to find the letter/position of the IRS on this (I have not found it)? It would make my discussion with Justworks easier, particularly as they have already rebuffed my attempt to get them to correct it. If you don't have it, that's fine too. I appreciate your help!

Thank you!

[JulieS]

The general guidance is in the instructions for Form 1040. Look for the line 11 instruction for Schedule 3.

 Click here 

[Kawh]

Hi everyone. I have done more research, and this against what was said here. The Federal Register says that each customer of a CPEO is to be treated separately for wage-base purposes. Relevant text and link follow:

"The proposed regulations also provide that if, during a calendar year, a covered employee receives remuneration from a CPEO for services performed by the covered employee for more than one customer of the CPEO, the annual wage base and withholding threshold do not apply to the aggregate remuneration received by the covered employee from the CPEO for services performed for all such customers. Rather, the annual wage base and withholding threshold apply separately to the remuneration received by the covered employee from the CPEO with respect to services performed for each customer."

There is a larger explanation in the following link:

https://www.federalregister.gov/d/2019-10856/p-22

With that in mind, how do I correctly file for a tax reimbursement under Line 11 Schedule 3 using TurboTax?

Thank you.

[BillM223]

Thank you for the reference.

I see two things here:

1. "the annual wage base and withholding threshold apply separately to the remuneration received by the covered employee from the CPEO with respect to services performed for each customer."

   This says to me that it is correct that each "employer" (actually, customer of the CPEO) withhold taxes on the employee independently of what the other customers of the CPEO are doing - which results in the possibility of over withholding Social Security taxes.

2. "Sections 3511(a) and (c), provide that, for federal employment tax purposes, a CPEO is treated as the employer of covered employees that are work site employees (section 3511(a)(1)) and covered employees that are not work site employees (non-work site covered employees) (section 3511(c)(1)) with regard to remuneration it pays to these covered employees."

"federal employment tax" refers to the Social Security, Medicare and other taxes that employers pay directly to the IRS.

Here, the IRS is reiterating that the CPEO is the employer of the employee, not any of the customers of the CPEO.

What this section from the Federal Register doesn't seem to address is what do you do when the inevitable happens and the two customers of the CPEO collectively withhold more than the Social Security limit, yet the CPEO itself has only the one EIN because it is the employer of record, so the existing IRS rules are that the employer must refund the excess SS withheld.

I have read this several times, and I don't yet see the solution to the dilemma.

What I will do is pass this on to the company. 

As for your last question about getting the tax reimbursement on line 11, all I can tell you is that the software no longer permits that, for the reasons I gave earlier. If you have the CD/download software, you can possibly override that line, but (1) this voids the Intuit guarantee of accuracy, (2) possibly makes it impossible to e-file (someone overrides do, I don't know if all overrides do), and (3), will quite likely cause the IRS to write you a letter telling you not to take this amount on your return, as has happened to TurboTax customers in previous years when we still had the feature that allowed taxpayers in certain situations to claim this amount on the tax return despite "both" employers having the same EIN.

I will let you know if I hear anything.

[Kawh]

Hi BillM223. Thank you for your answer. I agree that this is unusual. Please let me know if you hear anything back. I'm trying to figure out a workaround, as it seems that I really do need to edit that line directly. Thank you. 

[Kawh]

Hi @BillM223. Hope you've been safe. I was wondering if you had heard back from the company on this. Thank you.

[BillM223]

@Kawh

Thank you for your concern. My wife and I both work from home, so we were practicing quarantining and social distancing long before it became trendy ;-).

I have not heard from the company on any plans to change how the program works this year. Frankly, at this point in the tax season, it's unlikely that a change will be made (if any) until after April 15th (and not the day after, either).

The workaround involves acquiring the "desktop" software if you don't already have it i.e., (the CD/download software), transferring your data to that software, then going into forms mode and forcing the entry in Line 11 on Schedule 3.

This will void the computation guarantee, but I am thinking that that is acceptable to you.

Sorry I don't have a better answer.

[Kawh]

hi @BillM223. Glad that you're an expert in these WFH techniques!

As for the software, I already paid for TurboTax online. (That's how I noticed that the incorrect forms.) Do I have to repay to get the CD/Download version? Thank you.

[BillM223]

I would encourage you to contact our phone support people and see if you can persuade them to push a copy of the CD/download software to you. Explain that you have paid for Online (have any receipts with order numbers ready), that you have been working with the tax pros in the Community, and that it was suggested to you that you needed a workaround that was available only on the CD/download software. 

I can't guarantee that they will send it to you, but it will save you a few bucks if they do.

[TedSavage]

I have this exact same problem, but with Trinet as my PEO. Have not paid TurboTax yet, would it be better to find a CPA to do to this instead? I'd prefer to use TurboTax, but this seems like a thorny issue.

[Kawh]

Turbotax has no known way of filing this electronically, even if using the downloaded version. With the download, you can at least hijack the relevant form, but you'll have to file federal and state by mail. 

I did not find a different software, but would be curious if you find something else that works eventually. Thank you.