Employee has approx $51,000 in box 1 W-2 wages. SS & Medicare wages boxes show about $15,000 and the correct amount of taxes on those lower wages. The shortfall of about $36,000 was mistakenly left off her payroll computation for SS & medicare withholding, when she changed depts or something.
So she was paid that money (about $2,800) that should have gone into SS/medicare w/h'ing, and didn't notice the error until receipt of the W-2. I'm thinking- hey you got the money, and should repay it in to correct the error. However, she wants to negotiate the issue with employer, since it was their mistake.
I think I recall once seeing something where the employer is responsible for the taxes on such a mistake, but I haven't dug into it yet. Or maybe I'm thinking that is in the context of IC v employee classification.
Anyone have a direction to point me in? Thx! Barbara
Update- pub 15 p. 30- Looks like employer is on the hook for the underpayment, and must settle with employee for reimbursement.
So she was paid that money (about $2,800) that should have gone into SS/medicare w/h'ing, and didn't notice the error until receipt of the W-2. I'm thinking- hey you got the money, and should repay it in to correct the error. However, she wants to negotiate the issue with employer, since it was their mistake.
I think I recall once seeing something where the employer is responsible for the taxes on such a mistake, but I haven't dug into it yet. Or maybe I'm thinking that is in the context of IC v employee classification.
Anyone have a direction to point me in? Thx! Barbara
Update- pub 15 p. 30- Looks like employer is on the hook for the underpayment, and must settle with employee for reimbursement.
