topic It is resolved then -- GREAT in Retirement tax questions

We filed our taxes 2 weeks ago with TT. After, we found out my wife's employer had not withheld any social security or medicare. What should we do?

bensolucky — Sat, 01 Jun 2019 18:20:52 GMT

Presumably the correct amount was taken out of our refund. We contacted her employer, and they said they can make that change retroactively but they want us to ask a tax professional what to do first.

Did she get a W-2 or a 1099-MISC?

SweetieJean — Sat, 01 Jun 2019 18:20:53 GMT

Did she get a W-2 or a 1099-MISC?

She did get a W-2. That's where I discovered that SS and...

bensolucky — Sat, 01 Jun 2019 18:20:57 GMT

She did get a W-2. That's where I discovered that SS and Medicare withholding boxes were marked 0.

Did the employer take out anything else? Like withholdin...

VolvoGirl — Sat, 01 Jun 2019 18:20:57 GMT

Did the employer take out anything else? Like withholding or other deductions? Maybe they meant to pay her as a 1099Misc independent contractor? Are there other employees? Is the employer a company or just a small sole proprietor, etc.?

Your wife isn't on a foreign work visa?

It is a small-ish company. They took out all other withho...

bensolucky — Sat, 01 Jun 2019 18:21:01 GMT

It is a small-ish company. They took out all other withholdings correctly. She was on a work visa but her status was adjusted last year to a marriage visa. The employer has said that this was a mistake.

Was she in the US for all of 2018? It sounds like they T...

TaxGuyBill — Sat, 01 Jun 2019 18:21:02 GMT

Was she in the US for all of 2018?

It sounds like they THOUGHT she was a Nonresident Alien that was exempt from Social Security and Medicare, but it sounds like she actually was probably a Resident Alien.

They can ask for her to repay the Social Security and Medicare taxes that SHOULD have been withheld, but I don't THINK they can legally require it (but not complying could cause problems at work). Or they can pay it themselves, and 'gross up' the amount paid (so you will pay income tax on the amount of Social Security and Medicare taxes they taxes for you).

It is the employer's responsibility to do payroll correctly, so THEY are the ones that need to correct it. If they don't know what to do, THEY need to consult a tax professional.

Agreeing with @TaxGuyBill 's advice, I just wonder -- wha...

pk — Sat, 01 Jun 2019 18:21:03 GMT

Agreeing with @TaxGuyBill 's advice, I just wonder -- what was her visa originally and what/when was the visa change made.? Was the employer informed of the change?

She was on an OPT/F-1 Visa, and she changed to a marriage...

bensolucky — Sat, 01 Jun 2019 18:21:05 GMT

She was on an OPT/F-1 Visa, and she changed to a marriage visa in the early months of last year. The employer was informed, it sounds like they just weren't being careful with these things and didn't have experienced people doing their payroll.

By marriage visa , do you mean K visa or what? What is yo...

pk — Sat, 01 Jun 2019 18:21:07 GMT

By marriage visa , do you mean K visa or what? What is your ( assuming you are the husband ) immigration status -- US citizen/ resident/resident for tax purposes? What country is she a citizen of ? I am assuming that because she was on F-1/OPT , she had already completed her five years of exempt status ( yes ?). When in 2018 was the visa changed? When did she first enter the country with F-1 ?
I am asking all these , because it is possible that she is still a non-resident alien and still on on OPT status , implying she does not need to have FICA withheld.

Thank you to everyone who answered. Her HR has said they...

bensolucky — Sat, 01 Jun 2019 18:21:08 GMT

Thank you to everyone who answered. Her HR has said they will make up the difference on their side, meaning they will pay what should have been withheld to the IRS this year. I think the only further impact is that will be treated as income to us on our 2019 tax return. Assuming they handle as they have said, it seems it's been resolved and in a way that doesn't hurt us at all.

Responding the last comment from pk, I should have said marriage green card. Yes, I'm a US citizen. I'm not sure what five years of exempt status is, but she's been in this country less than 5 years as of 2018. I'm not totally sure if she was supposed to have FICA withheld in previous years or not. Maybe it's optional on a status like an OPT visa - checking her Social Security login it looks like her employer in 2015 actually did withhold FICA, but then the current one didn't in 2017 or 2016.

If they are paying the difference, they SHOULD issue you...

TaxGuyBill — Sat, 01 Jun 2019 18:21:10 GMT

If they are paying the difference, they SHOULD issue you a new W-2 for 2018 that shows the income for 2018 (not 2019).

It is resolved then -- GREAT

pk — Sat, 01 Jun 2019 18:21:12 GMT

It is resolved then -- GREAT

TT does not handle this situation, since she is not self-...

SweetieJean — Sat, 01 Jun 2019 18:21:15 GMT

TT does not handle this situation, since she is not self-employed. Have her employer correct it.

Thank you. Do you think we will also need to do somethin...

bensolucky — Sat, 01 Jun 2019 18:21:16 GMT

Thank you. Do you think we will also need to do something, i.e. amend or submit a corrected return?

It depends upon how your employer chooses to handle this....

SweetieJean — Sat, 01 Jun 2019 18:21:17 GMT

It depends upon how your employer chooses to handle this. They might issue a corrected 2018 W-2, or do something else instead. Post back once they take care of it.
It's also not clear whether it's just the W-2 that is wrong, or if her employer actually failed to take out those amounts all year.

They failed to withhold those amounts. As far as how the...

bensolucky — Sat, 01 Jun 2019 18:21:19 GMT

They failed to withhold those amounts. As far as how they are choosing to handle it, they are waiting for us to tell them how we would like it handled and what we are going to do. So it seems like we are both waiting for each other.

Perhaps you or they should call the IRS and ask for advice.

SweetieJean — Sat, 01 Jun 2019 18:21:20 GMT

Perhaps you or they should call the IRS and ask for advice.

Doesn't seem like they can retroactively have her pay the...

VolvoGirl — Sat, 01 Jun 2019 18:21:21 GMT

Doesn't seem like they can retroactively have her pay the SS and Medicare taxes now. And that might be a lot for you to pay for the whole year. How much was the income? And it would be on the full gross income before any pretax deductions like for 401K .

SS is 6.2% .062
Medicare is 1.45% .0145