Intuit Community Champion

Question

Excess Social Security Withheld - One Employer

Forum|Forum|3 years ago
March 21, 2023
4 replies
24 views

Employer was sold mid year. Buying company took over payroll and began withholdings from zero. Ultimately, my client received two W2's from the same company. W2 #1 had already had maximum SS withholdings. W2 #2 showed additional SS withholdings. Company would not reimburse employee due to the "sale".

Wondering if anyone has used IRS Form 843 to claim a refund? It looks fairly straightforward and I will add copies of both W2's and show the calculations for the requested refund of the excess SS withheld.

I did read up on the topic:

Instructions for Form 843 (12/2021) | Internal Revenue Service (irs.gov)

ProSeries Professional

This topic has been closed for replies.

IRonMaN

Level 15

Did the new owners actually buy the stock or did they buy assets and the name? If they bought the assets, the W-2s were prepared correctly.

Slava Ukraini!

GodFather

Author

Intuit Community Champion

Clients are unsure Ironman. But thanks for the info.

abctax55

Level 15

Are there two different FEIN's on the W-2's

HumanKind... Be Both

GodFather

Author

Intuit Community Champion

Will verify this. Thank you.

G

garman22

Intuit Community Champion

Unless I am missing something, when you file the return the excess SS withheld will show up as additional withholdings and there is your refund or lowering of any balance due.

R

rcooley25

Level 7

Just enter both w2's normally.

If as you say there is an overpayment of social security it will automatically show on the tax return as additional money withheld for income taxes. End of problem.

I would question the mentality of the new owners accountants having them start a new company rather than just buying the corporate stock in the previous corporation ( If we are talking corporations ) because that new company had to match the social security withheld which they would not have to do if the corporation was just operating under the old corporate charter. And then there is federal and state unemployment tax that they had to pay when the previous company had already reached the limit. And that is why they pay these people the big bucks?

abctax55

Level 15

@rcooley25

When one buys the stock of a corporation, one is also buying all the liabilities. Known and *UNKNOWN* liabilities. And it's the unknown ones that can be problematic.

There's a lot more going on with buying the stock than just payroll issues.

HumanKind... Be Both

R

rcooley25

Level 7

Depending on the number of employees we are talking about a huge amount of payroll expenses that the new owners should not have had to pay.

R

rkohara01

Level 3

I had the same issue and filed the 843, which was rejected by the IRS as the inappropriate method to claim the excess SS. BTW, I filed an amended return before I was aware of the 843 and that didn't work, obviously.

We appealed to TAS to resolve this issue. The TAS rep agreed with us and tried to get the 843 processed. But the examiner just rejected the appeal, claiming that a 1040-X IS the correct method, and we should designate the employer with a CPEO (Certified Professional Employment Organization) exception. I can't find any reference to this exception in ProSeries.

Any thoughts??

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