topic Does my business have to pay the business portion (7.65%) of FICA taxes on year end profit sharing contributions that are deposited directly into employees 401k plans? in Business & farm

Does my business have to pay the business portion (7.65%) of FICA taxes on year end profit sharing contributions that are deposited directly into employees 401k plans?

dkonruff — Thu, 06 Jun 2019 18:08:22 GMT

We are a subchapter S Corp with only one employee and a safe harbor plan.

No. Profit-sharing contributions are employer contributi...

dmertz — Thu, 06 Jun 2019 18:08:23 GMT

No. Profit-sharing contributions are employer contributions, not part of employee compensation. Employer profit-sharing contributions are included nowhere on the employee's W-2.

You said "we" are an S corp, implying that the S corp has...

dmertz — Thu, 06 Jun 2019 18:08:25 GMT

You said "we" are an S corp, implying that the S corp has more than one employee. Shareholders are also employees if the shareholders provide any services to the S corp and must be paid reasonable wages reported on a W-2 .

Thanks for the answers. I understand that the profit sha...

dkonruff — Thu, 06 Jun 2019 18:08:26 GMT

Thanks for the answers. I understand that the profit sharing contribution does not show up on the employees W-2. My question relates to the employers portion of the SS and Medicare taxes. As an employer do I have to pay in the employer portion... 7.65%. I know that there is no withholding from the employee.

That's the question I answered when I said "No." I then...

dmertz — Thu, 06 Jun 2019 18:08:27 GMT

That's the question I answered when I said "No." I then explained that the answer is No because the profit-sharing contribution is not part of the employee's compensation.

Thank you. I thought the question was misinterpreted. T...

dkonruff — Thu, 06 Jun 2019 18:08:29 GMT

Thank you. I thought the question was misinterpreted. Thank you so much for your help!!!