Question

During 2018, Greg Cruz (1401 Orangedale Road, Troy, MI 48084) works for Maple Corporation and Gray Company. He earns $90,000 at Maple Corporation, where he is a full-time employee. Greg also works part-time for Gray Company for wages of $50,000.

Did Greg experience an overwithholding of FICA taxes? Write a letter to Greg and a memo for the tax files in which you explain your conclusion.

Did Maple Corporation and Gray Company overpay the employer’s portion of FICA? Explain.

Answer 1

Earnings upto 128,400 are subject to social security withholding at 6.2% and employer matches the contribution.

Since total wages of the taxpayer $140,000 exceeds the limit but at each employer the limit is not crossed there will be over withholding of social security.

Amount of excess withholding = ($140,000 - $128,400) * 6.2% = $719.20

This excess amount can be claimed as refund on tax return by Greg.

Since, employers must have matched the contribution there will be $719.20 excess payment by the employers together as well. But this amount can not be claimed as refund by the employers.

Greg must attach form 843 to claim refund. Excess amount appears on line 71 of form 1040.