Employer didn't collect FICA

[GLJEANNE]

Client was an election worker, went way above the minimum for having FICA withheld, but the county screwed up and never withheld.  So her W2 shows 4k plus of income, but no taxes.  Nothing the county can do it about it now, so she knows she'll have to pay up on her return.

Ideas on what form to use to pay that??  8919 doesn't apply.  It's not unreported income, so not 4137.  Although if I can't find another way, I'll have her paper-file and force the taxes onto 4137.  But I hate to do that, she's getting a big refund, and who knows how much paper-filing will be slowed up this year.

[Medlin Software, Dennis]

Pub 15:

 

Does not appear to be the TP's problem, other than possibly getting a W2c if the employer and employee do not agree on a repayment (causing the employer to add the employer paid employee amount as wages).

[GLJEANNE]

Being long past the last day of the year, it's too late for the employer to do anything about it.

 

[Medlin Software, Dennis]

8 minutes ago, GLJEANNE said:

Being long past the last day of the year, it's too late for the employer to do anything about it.

 

That is not true.  941x and W2c exist for many reasons.  Per Pub 15, the employer is responsible for depositing both parts.  This would cause the need for 941x.  Employee does not have to agree to pay the employer back, so the employer would then issue a W2c, which would include the amount "withheld" (corrected), and increased wages (the amount the employer has to add to cover the employee amounts the employer had to pay).

[GLJEANNE]

No, this is not a payroll issue.  It's purely a tax form question.

[Medlin Software, Dennis]

IMO, the W2 is not correct, not valid for the given employee, and should not be used as is. Reporting the amount as tips would not work for me either.  The problem was caused by payroll, and that is where the solution comes from.  The employee could choose another option, the form claiming the employer did something wrong, but that may bot be a comfortable way to go.  I suspect, face to face (such as it is now) with a payroll manager at the county would get results.

I suspect you could use it as is, and deal with the likely eventual W2c, but that could cost your client more money, and may not make them happy.  The client has no responsibility, at present, to pay for the employer's mistake, which is why you cannot find a form to allow a W2 employee to pay their own SS and Medicare contributions.

[Sara EA]

Don't forget that in 2020, employers could opt to not withhold employee portion of FICA.  They are supposed to make it up over 12 months in 2021, when your client is no longer working.  Don't know what the consequence is in that case.  It was somewhere in the IRS materials.  Maybe someone knows.

[Lee B]

If the employee is no longer working then it's the employer's responsibility.

[Lee B]

32 minutes ago, Sara EA said:

Don't forget that in 2020, employers could opt to not withhold employee portion of FICA. .......

Except that the employer is still required to withhold Medicare and apparently no withholding of any kind was was done.

[Medlin Software, Dennis]

6 minutes ago, cbslee said:

If the employee is no longer working then it's the employer's responsibility.

I suppose the employee could gross up their taxable wages to reflect the employer paying the employee shares, and file similar to a missing W2, if the employee is in need of filing soon.  That may be what I would do if facing this (as the employee), since it leaves the rest of the burden on the employer, other than the employee needing to monitor their SS statements to make sure the correct amount of wages is reported, and the correct amount of contributions (probably a process for asking for corrections for those items).

The employer, being a govt agency, likely is not going to fix unless pushed, as someone will have to take on responsibility for the error and associated costs, which is not something all govt employees (especially if an at will employee) may be willing to do voluntarily.

(A bit jaded today, as I am dealing with a quasi govt employee who made an $8k blunder, and is hoping I let it slide, or that I will fall for their "if the insurer does not pay" clause.  The issue was a medical billing coding error, and when prompted for a correction, they did not repair in a timely fashion.)

[Slippery Pencil]

Aren't counties exempt from FICA?

[Slippery Pencil]

8 hours ago, GLJEANNE said:

Client was an election worker, went way above the minimum for having FICA withheld

Isn't the minimum for having FICA withheld basically zero?

[Max W]

1 hour ago, Slippery Pencil said:

Aren't counties exempt from FICA?

Only if the employee is enrolled in a pension plan, such as 403b, 457, TSP, etc.  Not likely for an election worker.

[Gail in Virginia]

Election worker's in my area are considered contract labor and get a 1099 (if anything - this year was unusual in how much some of the election workers were paid because they worked much longer hours due to early voting.)  That said, I have also had "interns" that worked for local government get W2's with no withholding of any kind.  Box 3 and 5 usually have no amounts in that case.  But I haven't seen that in several years, and don't remember how I handled it.  I just remember that the local HR department insisted that they could do that and it was correct.

[Pacun]

File schedule C and report all the income and pay SE. 

That's how the world bank pays to their employees and they file schedule C. 

[GLJEANNE]

Here, election workers are W2 employees.  Under $1800, they don't pay tax.  Over it, and the county should have switched to withholding, but they didn't.  The W2 is perfectly accurate for what actually happened. 

The only question is whether or not there is form to pay the taxes that can be e-filed.  My guess is no, but I was hoping someone might have run into this before.

[Medlin Software, Dennis]

1 hour ago, GLJEANNE said:

Here, election workers are W2 employees.

Correct! In the U.S., election workers are noted specifically in IRS Pub 15.  They do get some possible exemptions, since the majority are one day workers, but once they reach a certain amount of earnings (as shown in Pub 15), their wages are subject to SS and Medicare.  Yes, even government payroll personnel can make mistakes, such as issuing a 1099 for employee wages.

(From 2012 Pub 15, Columns are: Type of employment, Federal WH, SS/Medi, FUTA)

   

 

[Abby Normal]

12 hours ago, Slippery Pencil said:

Isn't the minimum for having FICA withheld basically zero?

Yep.

Not sure why I'd ever worry about FICA withholding when it has no bearing on the tax return. I get W2's with no FICA withheld a few times every year. I just delete the FICA wages on the W2 and move on.

[grandmabee]

6 hours ago, GLJEANNE said:

Here, election workers are W2 employees.  Under $1800, they don't pay tax.  Over it, and the county should have switched to withholding, but they didn't.  The W2 is perfectly accurate for what actually happened. 

The only question is whether or not there is form to pay the taxes that can be e-filed.  My guess is no, but I was hoping someone might have run into this before.

Then file it with what actually happened.  Wait for the correction to the W-2 if ever.