FICA Requirement for withholding - where can this be found in IRS documents?

[duanecpa]

Situation:

Employer 2 of employee knows that employee's Employer 1 will withhold the maximum FICA for the year. Is there any exclusion allowing for Employer 2 not withholding FICA on the employee's wages?

If not, where is it written that both employers must withhold FICA?

Thank you.

[ATSMAN]

I don't think there is a way to have a second employer NOT withold social security tax if you have already hit the max with the first.

I have 2 or 3 health care professionals who work for several employers and they run into this situation each year. What we have done is reduce the Fed witholding on the W4 of the 2 and 3rd employer to offset it to the extent possible. It is all adjusted at the end when they file 1040.

If the 2 or 3rd employer simply uses the Fed W4 for state witholding, they need to correct that otherwise there will be underwitholding.

[Koss]

where is it written that both employers must withhold FICA?

You won't find it written anywhere that both employers must withhold FICA. However, the regs do say that all employers must withhold FICA. There are a few arcane exceptions, such as nonresident aliens and certain local government employees. There is no exception for a "second employer." What if he left the first job and didn't inform the second? Every employer must withhold FICA.

BMK

[MRTAX4EA]

Free use of $$ and employer match

When I have previously thought about this issue I realized that not only is the government getting the free use of the overwithheld amount, but the employer match is also thrown in.

[Burke]

And while the employee gets his overpaid FICA back when he files his 1040, the second employer does not.

[ATSMAN]

And while the employee gets his overpaid FICA back when he files his 1040, the second employer does not.

Can the 2nd employer do an adjustment to his form 941, if he became aware of this at a later date?

[Koss]

Employer FICA Contribution

And while the employee gets his overpaid FICA back when he files his 1040, the second employer does not.

Very interesting observation...

Can the 2nd employer do an adjustment to his form 941, if he became aware of this at a later date?

I don't think that would fly. I haven't looked for a concrete citation to the Internal Revenue Code or any other authoritative source, but my superficial research on this question leads me to the conclusion that when it comes to the employer's "share" of FICA, each employer is liable up to the maximum, even if there are multiple employers. In other words, each employer's liability for FICA stands on its own, independently of whether another employer is also contributing for the same employee.

BMK

[WhiteOleander]

I think the issue would be who would be considered the second employer. Each one would want to claim to be second so they could get money back. If the employee works at two places at the same time, there is no way to way who is second.

[Koss]

Second Employer

I think the issue would be who would be considered the second employer. Each one would want to claim to be second so they could get money back. If the employee works at two places at the same time, there is no way to way who is second.

Good point. In theory, there are ways that this could be resolved, even if the employee worked for two employers simultaneously. One approach would be to simply identify the point in time at which the employee reached the maximum wage base. For any wages paid after that point, at least in theory, neither employer would have to pay FICA. This could be determined retroactively, after the close of the tax year, based on when the wages were actually paid, in order to calculate a refund for each employer.

But that's just not how the law works. The employer's share of FICA is a tax imposed upon the employer, and it applies to all wages paid by the employer to each employee, up to the maximum wage base. It is a rather subtle distinction, but the point here is that the employer's share of FICA is not based on the amount earned by the employee, but rather on the amount paid by that employer.

In contrast, the employee's share of FICA is based on the amount earned by the employee, and this what makes it possible to claim a credit.

BMK

[New York Enrolled Agent]

Situation:

Employer 2 of employee knows that employee's Employer 1 will withhold the maximum FICA for the year. Is there any exclusion allowing for Employer 2 not withholding FICA on the employee's wages?

If not, where is it written that both employers must withhold FICA?

Thank you.

There is one exclusion when the corporations are related and share a common paymaster. Based on your post, I don't infer you have this situation but you asked about any possible exclusion. From the IRM:

4.23.8.6.1 (02-01-2003)
Common Paymaster

1.When two or more related corporations employ the same individual at the same time and pay that individual through a common paymaster which is one of the related corporations, there are limits on the amount of FICA tax due. The related corporations pay FICA as if all the corporations were one employer. The common paymaster is responsible for filing tax returns and issuing Forms W-2 with respect to wages it is considered to have paid under this section.

[TXEA]

All employers must withhold taxes - IRC 3111 (there are no exceptions listed for your situation).

However, if these two employers are related, research the "common paymaster rules" to see if it might resolve your problems.