I hear from people every week who think their tax problem is the end of the world. It usually isn't. I'm Darrin Mish. I've resolved over $100 million in tax debt for clients. Here's what you should know.
Today, I’ll conclude on my article yesterday about how to correct FICA withholding errors on your employees’ wages. As I said yesterday, it’s easy to make withholding mistakes, so keep IRS Publication 505, “Tax Withholding and Estimated Tax,” handy, and consult with a tax professional if need be. So what can you do if you overpaid in your withholding?
For overpayments of FICA taxes, you as the employer may make an adjustment or seek a credit or refund of the employer share of the FICA tax. Generally, you cannot seek the employer’s share of overpaid FICA taxes unless you in your capacity as a fiduciary also seek the employee’s share. This makes things a bit more complicated for you, as you have to obtain consent from your employee to claim the credit or refund on his or her behalf.
In some instances, you must obtain a certification that your employee has not sought and will not seek a refund for the same overpayment amount. However, this requirement does not apply when the taxes were not withheld from the employee. It also does not apply in a situation when after you have made reasonable efforts to repay or reimburse your employee or secure his or her consent, you cannot locate the employee or the employee will not provide consent.