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Social Security Max out

  • 1.  Social Security Max out

    Posted Sep 25, 2019 09:21 AM
    We took over payroll from another provider for one of our sister companies on September 1st, but two individuals had previously maxed out their social security withholding. Without doing manual checks to put in beginning balances, how can I tell GP that they are maxed out and to discontinue social security? The other payroll provider will report the first 8 months of the year for W-2 and tax purposes and we are responsible for the last 4 months of the year.

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    Kelly Creager
    Wagner-Meinert, LLC
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  • 2.  RE: Social Security Max out

    TOP CONTRIBUTOR
    Posted Sep 25, 2019 10:50 AM
    Hi @Kelly Creager,

    The short answer is, you can't. From a payroll perspective, I think it's important to understand one piece of information. That is, are you planning to report W-2 information under a different EIN than the previous payroll provider?

    If so, then all wage limits for Social Security and Medicare tax are reset for the "new" employer and you cannot consider payments made by another EIN for the sake of withholding these taxes. (There are specific exceptions for common paymasters - not sure that applies to you.) If the employee overpays these taxes as a result, they can apply for a refund when they complete their 1040 return.

    If NOT, this provides another complication. I'm an unaware of a process for an employee to receive multiple W-2's from the same EIN. Also, I don't know of a medium for the SSA to receive two different W-2's for the employee as well.

    Thinking about an 8 month/4 month implementation, I'm curious how you're going to handle unemployment taxes that are reported by quarter and you appear to have mid-quarter cutover. Just a side-note/concern in relation to your question.

    Hope this helps bring some clarity to your question. Happy to add more if you have additional concerns.

    All the best!​

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    Tom Franz, CPP
    (217) 689-4658 - tfranz@integrity-data.com
    Director of Client Services
    Integrity Data
    Lincoln IL
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