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Level 2
posted Feb 15, 2022 11:17:04 PM

Had 3 jobs and received two W2 because 2 employers used the same PEO. Have excess social security withheld, but Turbotax will not calculate this as credit

This is for tax year 2021 and the situation is as follow:

 

1. Worked for 3 companies:

  • Company A
  • Company B
  • Company C

2. Received two W2:

  • Company A and B: same W2 because they use the same PEO. The PEO combined the social security withheld from A and B.
  • Company C: not using PEO.

3. Excess social security withheld:

  • W2 for Company A and B (through the PEO): let's say the excess is $1000
  • W2 for Company C: normal amount withheld (let's say $500) because Company C doesn't know how much social security tax I have previously paid.

Typically, Turbotax just add the excess ($1000 + $500 = $1,500) automatically in Schedule 3-Line 11 as a credit.

 

However, this is what happened:

  1. After entering BOTH W2, TurboTax said I can get credit for the excess social security.
  2. Clicked "Continue"
  3. The next page TurboTax  said "You may be due a refund from your employer" and told me to:
    • Get W2C from the PEO
    • Get refund for the excess social security the PEO

So at first TurboTax said I can get a credit, but the very next page it said I cannot and have to get W2C. I have TurboTax downloaded software and I manually looked at Schedule 3 Line 11 and it only show $500 (Company C) and not $1,500 (Company A and B plus Company C)

 

This is different than IRS Topic 608, which stated:

 

If you had more than one employer and too much Social Security tax .. withheld, you may be able to claim the excess as a credit against your income tax on your income tax return. Refer to “Excess Social Security and Tier 1 RRTA Tax Withheld” in the Instructions for Form 1040 (and Form 1040-SR) for more information.

 

I have 2 W2 forms, which show I worked for more than one employer, so I am not sure why TurboTax is telling me to get W2 and refund from the PEO

 

Is this a bug or there is some IRS ruling that I am unaware of?

 

Do I just manually have to edit the form and then e-file through Turbotax?

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1 Replies
Expert Alumni
Feb 16, 2022 5:55:34 AM

You are seeing both messages on screen because you are actually in both situations at the same time.  

 

The maximum amount of Social Security withholdings is $8853.60 per taxpayer.  If your box 4 withholdings on the combined W-2 that covers employers A and B is greater than $8853.60, then that portion of the excess is being treated as coming from a single employer who withheld too much, which is not allowed.  

 

The amount that is being reported on your Schedule 3 Line 11 should be the excess amount that would have been withheld if the first W-2 had stopped withholding at the maximum allowed limit.  Having Schedule 3 Line 11 be only the amount of excess due to employer C is correct since it appears that the other W-2 is wrong and having too much withheld from a single employer cannot be automatically refunded.

 

Even though your situation is not truly a single employer, having A and B combined on a single W-2 treats it that way.  

 

You will need to follow the advice in the following TurboTax article under the Single-Employer section to get the excess refunded:

 

Can I get a refund for excess Social Security tax withheld?