School part time employee pay regular federal and social security tax?

[Andking]

My wife worked as part time for 2 months. Her colleagues told her that she does not need pay federal and SS tax. I entered her W-2 into the Turbotax. No difference. It seems it asks me pay all the federal tax and SS tax. Did I miss anything? 

No place I can select or indicate as government employee (including school employee, funded by local tax money). 

[ThomasM125]

I can think of no compensation for services provided that would be exempt from income tax, with the exception of combat pay for military members. Some forms of income may be exempt, such as social security and disability benefits, but virtually all income paid for services rendered would be taxable, no matter for what period of time the services were provided.

[Andking]

Thanks a lot, ThomasM25. 

That is my understanding, or that might be reason that Turbotax does not have an option there to indicate that this is from government employment pay. 

Only suspicious point in the W-2 from the local school district, it did not withhold any federal or social security tax. But it did withhold medicare tax.  I do not the reasons behind.  Any thoughts?  

[ThomasM125]

Certain types of income are exempt from social security tax, such as some forms of clergy pay, so there may be some special exemption. Medicare is different from social security, so just because your're exempt from social security tax does not mean you would be exempt from medicare.

[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?

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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.

[Anonymous]

if she got a w-2 and the social security and/or  medicare wage boxes show $0 there no need to pay those taxes.

however if by W-2 you mean 1099-Misc, then yes she is subject to social security and medicare taxes if the amount is over $400

[Andking]

Hackitoff and others, Thank you all for the good answers. I learned something very good from you. Last question, she got the W-2 with $0 social security and $0 federal. My wife and I file the jointly 1040. How can I indicate her part time income is from school district and no need to pay federal and social security? I have been use Turbotax for about 5 years. I never know this issue. If you could point out where to enter correct in Turbotax, it will save some money for my wife. She will smile. 

Next step, I need to correct last year's filing. My wife also have some part time income from school. I reported it as regular income. Turbotax calculated the normal way. I paid more to Uncle Sam.  

[VictoriaD75]

Report the W-2 as presented. You must still pay Federal income tax on it. It is still included in regular income. You should not need to amend if you reported the W-2 as received. Box 1 income should be included in ordinary income.

If boxes 3-6 are blank or have $0, then she was exempt from FICA taxes, which are Social Security and Medicare. This does not need to be separately reported. You need only enter the information as it looks on your document. 

[donthemon1]

Thanks for the answer. So my wife just started teaching in CA. So no social security withheld. But no Federal tax was withheld either? Se received a W2. Is the income wages still taxable? Why wasn't tax withheld? I didn't see the response above when I asked this question, but I still don't understand why no federal tax was withheld.

[DawnC]

Yes.  Her Box 1 wages are subject to ordinary income tax.  If she wants to do federal withholding on her wages, she can give her employer a completed W-4 form and they will withhold federal income tax based on how she fills out the form.   It is possible they were not required to withhold tax or she may have filled one out as an exempt employee.  If she reported 'exempt' on the form W-4, they would not withhold taxes but the wages are still taxable.   

What to know about the new 2020 IRS Form W-4 Employee’s Withholding Certificate    @donthemon1