Social Security Overpayment

[ridgewoodian]

Hi All,

My employer uses ADP for payroll who is considered my "employer" when it comes to my W-2.  My company changed its name halfway through 2019 which caused me to get two W-2s from ADP.  However, since my "employer" was still ADP, I overpaid Social Security taxes by over $1,400.  

TurboTax noticed this but that's it.  TurboTax says to get a refund from my "employer" which would be ADP (not my real-life employer).  However, ADP issued me a statement saying that they are not able to refund any excess SS taxes and that under my circumstances, I need to claim it as a credit on my income tax filing and it be refunded directly by the IRS.  

My question is:  How do I add this to my filing so that I get the amount I overpaid back?  I can't seem to find any option within TurboTax to add this credit.

Any help is greatly appreciated.  Thanks in advance.

Best,

Dan

[Anonymous]

this leaves you in a very unfortunate situation.   technically if there was only a name change, the company should have opted for the election to claim credit for the wages and taxes paid under the old name and alerted ADP so it would not start anew for Social Security.  i'm going by your statement that all that occurred was a a name change.  becuase then the IRS would not require the company to get a new ein and without a new ein there is no reason adp  should have over withheld on social security.  talk to you real employer.

if that doesn't work

 if the excess was withheld by employer error you can not take the credit, but must instead get a refund from your employer. If your employer refuses to do so, you can file form 843 to request a refund from the government. See page 240 of: http://www.irs.gov/pub/irs-pdf/p17.pdf 

[ridgewoodian]

Thank you for the reply!  I see I wasn't super clear in my question - in reality I think it was more than a name-change for my company.  I am told to treat it like two different employers under the same CPEO (ADP).  I feel like ADP, as a company who does this literally as their service, should be aware of things like this and adjust accordingly.  They issued an explanation stating that "as there has not been an overpayment of the Employer portion of the Social Security taxes, there is no mechanism by which ADP TotalSource could file an amendment or refund.  As a result, it appears that an individual who works for multiple unrelated clients of a CPEO and is therefore subject to separate taxable wage bases should likely be treated similar to an individual working for two separate employers outside of the CPEO agreement.  Under these circumstances any excess Employee Social Security taxes withheld due to the application of more than one taxable wage base to the individual during the prior calendar year would generally be claimed as a credit on the individual's annual income tax filing and refunded directly by the IRS."

[bearinman27]

Can you tell me what the resolution to this was? I am experiencing the same thing this year. Mid year change to business entity, both using ADP TotalSource FEIN, overpaid SS, Turbotax is stuck. It wont move on and a corrected W2 isn't required when you work for 2 different employers same year.

[DianeW777]

Yes. This situation is not common and therefore as a rule it would take two W-2s with different EINs to automatically receive the credit for excess FICA payments on almost all returns.  Since a certified professional employer organization (CPEO) is being utilized by the two different employers you worked for, then only one W-2 is issued and thus creates a need for manual intervention.  

Option 1: Paper filing. It is because of this situation and the need to file the letter with your return that you can choose paper filing instead of e-file.

• This can be accomplished in the TurboTax CD/Download version only as instructed earlier and placed here for convenience.
  • TurboTax CD/Download Switch to Forms (upper right), select "1040/1040SR Wks" and scroll down to Schedule 3 Line 11. Just above that line there is "Excess Social Security Smart Worksheet" where you can override the amount and it should flow to Schedule 3 Line 11. You should also see it reflected in Line 31 of Form 1040. 
  • How do I switch from TurboTax Online to TurboTax CD/Download?

Maybe the IRS will develop a plan for this in the future since they have dedicated information pages to this situation.

• CPEO Customers
• Out Sourcing Payroll and Third Part Payers

Option 2: File your return through e-file without the excess social security tax. Instead complete Form 843 to obtain your refund for the overpayment of your excess.

Be prepared with the following statement:

Attach a statement from the . The statement should indicate the following.

• The amount, if any, the employer has repaid or reimbursed you for excess taxes withheld.
• The amount, if any, of credit or refund claimed by the employer/CPEO or authorized by you to be claimed by the employer/CPEO.

The employer/CPEO should include in the statement the fact that it is made in support of your claim for refund of employee tax paid by the employer to the IRS.

@bearinman27 

[TaxExpertCPA]

I am a Certified Public Accountant, CPA licensed by NY state.

I take issue with the statement that this would be an uncommon occurrence. Considering that ADP is the largest payroll processor in the country, I would say it is actually very likely that anyone changing jobs in the tax year would receive 2 W2s from ADP for 2 different employers. In fact ADP is so large that the federal government uses its data in their labor statistic reporting.

On the options presented above, if you have this issue as I did for the 2022 tax year, I recommend filing the separate form 843 to claim your additional refund of overpaid social security tax. It will take longer but I cannot confirm that the desk top version of Turbotax can do this effectively. If our experience with Turbotax online is any indication, we can assume this is doubtful at best.

The good news is that if you used Turbotax premium, and you had this issue, you are due a 100% refund. See below and paste this in the explanation of your claim for a refund.

"I received 2 W2 forms from 2 different employers who both used the same payroll processor. Turbotax online software lacks the core functionality to process this correctly. This is an inherent flaw in the design of the software. The overpaid social security tax should be reported on 1040 Schedule 3, line 11, and added to my total refund. Because the Turbotax software is not designed to report this correctly, I am forced to file an additional form 843 with the IRS to receive this refund. This violates the Maximum Refund Guarantee / Maximum Tax Savings Guarantee - or Your Money Back. Please refund my payment 100%. 

• Maximum Refund Guarantee / Maximum Tax Savings Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. (TurboTax Online Free Edition customers are entitled to payment of $30.) Limitations apply. Excludes TurboTax Business products and services. See Terms of Service for details.