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1.16 IRS Procedures: W–4 - Allowances, Excess FICA, Students, Withholding
I changed jobs this year. At my first job, I was over the yearly
Social Security FICA limit. My employer at my second job also withheld Social
Security taxes even though I was over the limit. How do I get the excess Social
Security FICA back?
If you have more than one employer and your wages were over the annual
social security wage limit of $87,000.00 for 2003, you probably had too much
social security tax withheld. (There is no wage limit for Medicare tax.)
You can take a credit for the excess withheld in the "Payments" section
of Form 1040 or Form 1040A. Since it is credited in the payment section, it
is a refundable credit and is applied like a payment. It will either be applied
against any tax owed or refunded to you. The maximum social security tax for
the tax year can be found in the
Instructions for Form 1040 (General Inst.) for
the "Payments" section under "Excess Social Security and RRTA Tax Withheld,"
or in Publication 505, Tax Withholding and Estimated Tax .
References:
I have a part-time job and a full-time job. My wages at the full-time
job always exceed the FICA limit. Does my part-time employer have to withhold
FICA taxes on my part-time wages?
Yes, if your part-time job is with a different employer. Each employer
is responsible for withholding on wages subject to social security up to the
annual wage limit which is $87,000.00 for the 2003 tax year. They are not
responsible for determining any amount withheld by another employer. Consequently,
with two or more employers, too much social security will be withheld if your
total wages exceed the annual wage limit. (The wage limit is adjusted annually
for inflation.) That is the reason there is a credit for excess social security
and RRTA withheld. It is in the "Payments" section of Forms 1040 and 1040A
so that if it is not needed to apply against tax owed, it is refunded to you.
The Medicare tax has no annual wage limit.
References:
Why are Social Security and Medicare taxes deducted from my earnings
even through I am already collecting Social Security? Can I get these taxes
back?
Generally, employee wages are subject to social security and medicare taxes
regardless of the employee's age or whether he or she is receiving social
security benefits.
References:
For the first half of the year I was self-employed. I have now started
employment with a new company and realized that they will be withholding for
social security, too. Am I responsible for paying the social security part
up to the limit twice?
No, social security tax is paid up to the annual wage base limit regardless
of whether your income is derived from self employment income, wages and tips,
or a combination of both. For 2003, this dollar amount is $87,000. When computing Form 1040, Schedule SE (PDF) , Self-Employment Tax ,
the annual wage base amount is addressed to prevent over payment of the social
security tax.
References:
If I have overpaid to Social Security or Medicare, can I get that
money back?
If you worked for two or more employers, the credit for excess social security
withheld is claimed on Form 1040 (PDF) line 64.
If you file Form 1040A (PDF), include the credit
in the total of line 43 and put "Excess SST" and the amount of the credit
in the space to the left of the line. If you are filing a joint return, you
figure the credit separately for you and your spouse. For complete instructions,
refer to Credit for Excess Social Security Tax or Railroad Retirement
Tax Withheld in Chapter 38 of Publication 17, Your Federal
Income Tax .
References:
We had too much social security tax taken out this year. What form
do we need to fill out to request some of these monies back?
Credit for excess social security withheld is claimed on page 2 of Form
1040, U.S. Individual Income Tax Return. Refer to Credit for Excess Social
Security Tax or Railroad Retirement Tax Withheld in Chapter 38 of Publication 17, Your Federal Income Tax.
References:
Can you claim 99 withholdings on a W-4 form?
You can claim the number of withholding allowances that you are entitled
to based on the Form W-4 (PDF), Employee's Withholding
Allowance Certificate, worksheets. You can claim less than you are entitled,
but not more. You may not arbitrarily pick a number with the goal of avoiding
income tax withholding. The law provides for a civil penalty of $500 for filing
a false statement on Form W-4.
If at the time the Form W-4 is submitted, the employee has made any statement
indicating that the W-4 is false in any way, it is invalid. The employer would
then be required to treat the submitted form as invalid and withhold as if
the employee were single claiming no allowances.
Employers are required to submit any Forms W-4 with more than 10 allowances
claimed to the service center's Form W-4 coordinator. The W-4 coordinator
will review the employee's most recent tax returns and make a determination
as to whether to notify the employer to withhold based on a lesser number
of allowances.
References:
I would like to overpay my taxes so I get a larger refund. Is there
a problem in claiming less exemptions on my W-4 than are shown when I use
the Personal Allowance Worksheet?
You may claim fewer allowances than you are entitled to claim, but you
may not claim more than you are entitled to claim. If you only complete the
Personal Allowance Worksheet on the front of Form W-4 (PDF), Employee's Withholding Allowance Certificate, you may
not have accurately determined the number of allowances you are entitled to
claim. There are more worksheets (the Deductions and Adjustments Worksheet
and the Two-Earner/Two Job Worksheet) on the back of Form W-4. Complete all
applicable worksheets to determine the number of allowances you can claim.
References:
Is there a table available where I can calculate how much will actually
be withheld from my paycheck when I make a change on my W-4?
Yes, there is. It is the same table, or tables, that employers use to
determine how much to withhold based on the Form W-4 (PDF), Employee's
Withholding Allowance Certificate. In Publication 15, Circular
E, Employer's Tax Guide, there are two sets of income tax withholding
tables: the Percentage Method Tables and the Wage Bracket Method Tables. The
wage bracket method is probably the most commonly used method. There are separate
tables under each method based on marital status and payroll period. These
tables are not to be used to decide how many allowances should be claimed.
References:
Do I put the same number of exemptions on my tax return as I put
on my W-4 form?
What you put on your Form W-4 (PDF), Employee's
Withholding Allowance Certificate, are withholding allowances, not exemptions.
An exemption is allowed on your tax return for yourself, your spouse (if married
filing jointly), and qualifying dependents (if you are an U.S. citizen or
resident alien). Each exemption merits a withholding allowance on the Form
W-4 Personal Allowance Worksheet.
However, there are two more worksheets that may affect the final number
of allowances, and under some circumstances, you get more allowances than
you have exemptions. Some things that will be on your tax return, such as
itemized deductions, tax credits, and losses add allowances to the total number
of allowances. Some circumstances reduce the number of allowances, such as
non-wage income, having two jobs, or having two earners in the family. For
a more detailed discussion of withholding allowances, refer to Publication 505, Tax
Withholding and Estimated Tax.
References:
As a full-time student, am I exempt from federal taxes?
Every U.S. citizen or resident must file a U.S. income tax return if certain
income levels are reached. There is no exemption from tax for full-time students.
If you are a full-time student, you may not be working full time. Factors
that determine whether you have an income tax filing requirement include:
the amount of your income (earned and unearned),
whether you are able to be claimed as a dependent,
your filing status, and
your age.
If your income is below the filing requirement for your age, filing status,
and dependency status, you will not owe income tax on the income and will
not have to file a tax return. You may choose to file if you have withholding
that you would like refunded to you.
You may have given your employer a Form W-4 (PDF), Employee's
Withholding Allowance Certificate, claiming exemption from withholding.
To claim exemption from withholding, you generally would have to have had
no tax liability the previous year and expect none in the current year. An
exemption certificate is good for the calendar year.
References:
I am a full-time college student, can I claim exemption from withholding
on my W-4 form?
You are not automatically exempt from federal income tax withholding because
you are a full-time student. To claim exemption from withholding, the following
two statements must be true:
For the previous year, you had a right to a refund of ALL Federal income
tax withheld because you had no tax liability, and
For the current year, you expect a refund of all Federal income tax withheld
because you expect to have no tax liability.
References:
What can be done if an employer will not withhold income taxes,
social security, and Medicare from my pay?
Generally, in situations such as this, the employer is not considering
you to be an employee. Rather, you are being treated as an independent contractor
(self-employed person). If you cannot resolve this matter with your employer,
and if you feel that an employer-employee relationship exists, you should
submit a Form SS-8 (PDF), Determination of
Employee Work Status for Purposes of Federal Employment Taxes and Income Tax
Withholding. The factors used to determine if an employer-employee relationship
exists are covered in Chapter 2 of Publication 15-A (PDF), Employer's Supplemental Tax Guide.
If your status as an employee is not at issue, it may be that you are in
a category of employment whose earnings are not defined as wages under U.S.
social security law. Find out from your employer the reason that social security
and Medicare taxes are not being withheld from your pay. If you have further
questions, contact the IRS at 800-829-1040 or visit an IRS walk-in office
for assistance.
References:
- Form SS-8 (PDF) , Determination
of Employee Work Status for Purposes of Federal Employment Taxes and Income
Tax Withholding
- Publication 15-A (PDF) , Employer's
Supplemental Tax Guide
- Publication 1779 (PDF) , Independent
Contractor or Employee
Can an employer take out taxes if a W-4 was never filed?
Yes, an employer can. Employers should ask all employees to submit a signed Form W-4 (PDF), Employee's Withholding Allowance Certificate,
when they start work. It should be effective the first pay period. If the
employee does not submit a Form W-4, the employer should withhold as if the
employee were single claiming no allowances.
An employee may submit a Form W-4 at any time. The employer should base
the employee's income tax withholding on the most recently submitted Form
W-4, unless the IRS has notified the employer to withhold based on a different
number of allowances, or unless the W-4 is invalid. If an employee submits
a new Form W-4, the employer should start withholding based on that W-4 no
later than the start of the first payroll period ending on or after the 30th
day from the day the new W-4 is submitted.
References:
I am a graduate student and serve as a teaching assistant. I would
like to know whether FICA taxes need to be withheld from my paychecks?
Students who perform services for the school, college, or university where
they are enrolled and regularly attend classes are usually not subject to
social security and Medicare taxes.
If the student works for a public school, college or university which is
subject to a section 218 agreement, the student's services are automatically
subject to social security and Medicare taxes if the state has chosen to cover
students under its section 218 agreement with the Social Security Administration.
The employer can tell you whether its students' services are subject to social
security and Medicare taxes under a section 218 agreement.
References:
- Publication 15, Circular E, Employer's Tax Guide
- Federal Regulation section 31.3121(b)(10)-1
As I understand the law, student stipends are exempt from FICA and
Medicare taxes. If my university takes these taxes out of my stipend income,
can these taxes be recovered in some way?
If you are not performing a service for the university, your stipend would
be subject to income tax only if it does not meet the qualified scholarship
rules. Please refer toPublication 970 Tax Benefits for
Education, for information on when a stipend would be a qualified scholarship,
which would not be subject to social security and Medicare taxes. If you are
performing a service for the university, your income is taxable for income
tax purposes, but would generally be exempt from social security and Medicare
taxes if you are enrolled and regularly attending classes unless you are covered
under a section 218 agreement. Refer to Publication 15, Employer's
Tax Guide.
If your employer has been withholding social security and Medicare taxes
from your stipend, the employer should refund the withheld tax. If the employer
refuses to do so, Form 843 (PDF), Claim For
Refund and Request For Abatement, can be filed to claim credit for the
incorrectly withheld tax.
References:
Is the housing allowance for a minister subject to Social Security
Tax and Medicare Tax under FICA?
The entire amount of a minister's housing allowance is subject to social
security and Medicare taxes, even though it may be excluded from taxable income
for income taxes. A minister's compensation for services as an employee, as
well as from self-employment, is subject to Self-Employment Contributions
Act (SECA) taxes, not the Federal Insurance Contributions Act (FICA). Under
SECA the self-employed person pays all the taxes while under FICA the employer
and employee each pay half of the taxes.
However, if you are a duly ordained Commissioned, or licensed minister,
or member of a religious order not under a vow of poverty, or a Christian
Science Practitioner who elected and was approved for exemption from Social
Security coverage and self-employment tax, your housing allowance would not
be subject to social security or Medicare taxes under SECA.
References:
- Publication 517, Social Security and Other Information
for the Members of the Clergy and Religious Workers
- Form 4361 (PDF), Application
for Exemption from Self-Employment Tax for Use by Ministers, Members of Religious
Orders
- Tax Topic 417, Earnings for clergy
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