FICA Overpaid

[Unregistered]

TP earned >$90,000 with former employer prior to 3/31/05. On 4/1/05, TP started business (S-Corp) and paid herself $34,000 wages through end of 2005. Payroll company withheld $2,108 SS from her pay and S-corp matched. She will get her $2,108 refunded on her 1040.

The question is: Is there any way for the S-Corp to get back the $2,108 matched portion? Does it matter if the S-Corp was purchased from previous employer?

Thanks for any help

[Gretel]

Common paymaster

Check out the following webpage:

http://www.adp.com/taxfin/newsletter/taxres/pdf/nov2004_3.pdf

I think it should apply to your situation. Good luck.

[John of PA]

Good Question

A very good question, you stumped me on that one.

[Bees Knees]

Check out the following webpage:

http://www.adp.com/taxfin/newsletter/taxres/pdf/nov2004_3.pdf

I think it should apply to your situation. Good luck.

I don't believe the common paymaster rules would apply here because her former employer is not related to her new S corporation. If she owned both corporations, I think it would apply. But when the employers are each separate and unrelated, then each is subject to full FICA.

The employee obviously can recover the excess FICA on the 1040, but the employers cannot.

[JON]

Exceptions

There use to be a couple of exceptions where previous wages paid counted in FICA calculation. The only one I remember using was 351 incorporation where you could have prior to incorp wages to be part of post wage base for FICA. If you do not buy stock I do not think you case has an alternative.