Does Turbo Tax take into account Ohio teachers are not required to pay social security taxes?

[yazell-donald]

It does not appear that Turbo Tax is recognizing that Ohio teacher income is not taxable for social security as my refund amount decreases significantly after entering W-2. 

[xmasbaby0]

TurboTax is not going to deduct anything from your income to pay in to Social Security.  If your refund dropped, that is not the reason.  TurboTax is well aware that many teachers do not pay in to SS.  A lot of teachers pay into a Teachers Retirement System instead.

Did you already have some income entered when you entered the teacher's W-2?

You started off with your first W-2 and your refund looked high?  Then you added another W-2 and it stopped looking so good? That is normal.  When you added more income, your tax liability increased, so you saw your refund decrease.  The program began by giving you your standard deduction—- which lowered your taxable income. So you are not being taxed on as much of the income on that first W-2.  Then you added taxable income--so the refund went down. Your refund (or tax due) is based on the total of your income, not “per W-2.”  Wait until you have entered ALL of your income and deduction information.  You can't really tell anything until it is all entered.  That “refund monitor” does not mean anything until everything has been entered.

https://ttlc.intuit.com/questions/2273878-why-did-my-refund-drop-when-i-entered-another-w-28

[evoxking112!]

Well I called the irs and they said that they don’t know what that direct deposit is for because they have not even released any info on my federal tax return.  ???

[xmasbaby0]

@evoxking112!   You are posting to someone else's thread and your comment is not related at all.  Please start your own new question in your own thread.

[Hal_Al]

Yes,  Turbo Tax (TT) takes into account that Ohio teachers are not required to pay social security taxes.

In fact, TT  almost never calculates social security tax on W-2 wages. In the rare cases when it does, the user must initiate the process. 

[yazelld]

Thank you for the replies. I figured this was the case, but wanted to be sure.

[citonelson]

I'd like to know how TT takes into consideration the fact that school systems (and ergo teachers) in 15 states do not pay into SS.  There is no toggle button, pop up or additional question that comes up when you skip the two lines that typically gets filled in.    To this day I believe because it is not filled in and filed to the IRS there is the additional 6.2% levied onto the taxpayer because there is no amount entered when doing the return.   Like the original post, we file jointly as well.  Even when I enter my wife's W2 first, there is a large tax liability.  Her W9 has 0 dependants and $75/paycheck additional (Married, two kids, house) and it makes no sense.    So how is this nuance taken into consideration when filing through TT?

[Hal_Al]

Q. I'd like to know how TT takes into consideration the fact that school systems (and ergo teachers) in 15 states do not pay into SS. So how is this nuance taken into consideration when filing through TT?

A. If boxes 3 & 4 on your W-2 are blank or 0, TT leaves them at 0.  Nothing is done about the lack of SS tax, unless you tell TT that you need to calculate it (that's the tricky part).

Q. To this day I believe because it is not filled in and filed to the IRS there is the additional 6.2% levied onto the taxpayer because there is no amount entered when doing the return. 

A.  It is rare that TT will calculate SS tax, but when it does it will show on line 5 of schedule 2. If you have no Schedule 2 (and most tax payers don't) you have not paid any SS tax with the filing of your tax return.

Q. Even when I enter my wife's W2 first, there is a large tax liability.  Her W-4 (not  W9) has 0 dependants 

A.  Sometimes the tax calculation can be complicated (e.g. capital gains or qualified dividends), but for most people, to verify the correctness of your tax calculation, it's a simple matter of looking up the tax in the tax table.  Look up the amount on line 11b of form 1040 and verify that the amount on line 12b agrees with the table.

Tax table: https://www.irs.gov/pub/irs-pdf/i1040tt.pdf

[xmasbaby0]

Teachers and Social Security

There are 15 states (AK, CA, CO, CT, IL, LA, MA, ME, MO, NV, OH, TX) in which teachers do not pay in to Social Security, so you will not see Social Security withheld on the teacher’s W-2.  Instead, teachers in those states pay in to a Teacher’s Retirement System, which will show up elsewhere on the W-2 often in box 12 or box 14.

There are three states which have varying degrees of participation in SS for teachers, depending on school districts—GA, KY, and RI.

Why Does Social Security Leave Out Teachers in These 15 States?

•  

However, some state government employees, including teachers, don't pay Social Security payroll taxes and aren't entitled to retirement benefits from Social Security. The history of this practice dates all the way back to Social Security's formation, when the law was intended to cover only private employees. At the time, it wasn't clear whether the federal government could force states to pay payroll taxes. Only in the 1950s did the rules change, allowing states to have the ability to join Social Security.

The majority of states elected to enroll their government workers in Social Security. At that point, those workers started paying payroll taxes, and they earned their retirement benefits in the same way as any other worker.

However, not every state participated. Now teachers in 12 states -- Alaska, California, Colorado, Connecticut, Illinois, Louisiana, Maine, Massachusetts, Missouri, Nevada, Ohio, and Texas -- don't have coverage arrangements with Social Security. In addition, three other states -- Georgia, Kentucky, and Rhode Island -- have varying degrees of coverage that differ by school district.

[mccloskr]

Not a good response from TT.  

[mccloskr]

The SS Box on W2 doesnt impact refunds or in my case how much I owe.  My wife works at an ohio elementary scholl and box 2 is a zero for federal tax.  That is the one if you dont pay into impacts refund or bill.  But similar to SS does a teacher need to pay federal tax? 

[Hal_Al]

Q. Does a teacher need to pay federal tax? 

A. Yes, a teacher pays federal income tax. They do not pay federal social security tax and Medicare tax.

If her employer failed to withhold federal income tax (box 2 of the W-2), they projected that she would not make enough to have a net tax liability or she filled out her W-4 wrong.