How to get refund employee Social security and reverse the employer amount

Question

Dear Members, I have a requirement to refund overpayments of Social Security to an employee. The over payments have occurred as a result of an employee retiring in the same year they come back to work as a temp. They have two employee #'s therefore the maximum for Social Security will not be recognized until it is reached under the most recent employee number. We should not be over deducting for an employee that works for the same company. If it does happen to go through and over deduct, it is extremely difficult for the employee and employer to get the refund from the IRS. I have a requirement to refund the employee and reverse the employer amount as well. Looking for suggestion. Thanks in advance Punna Rao

Answer 1

Hi Friend,
You will need to have a new wage type may be called as Social Security Refund wage type created that will act to be taxed for only Social Security taxes and should be entered on IT0015 to be proccessed such that it should refund Social Security amount only.
Also, whenever you have case wherein you need to have limits set appropriately for Social Security taxes, have it entered prior to next payroll run on employees' IT221 as adjustment run so that it updates YTD correctly and there is no excess of SS tax payment.
Also, IT221 needs to be also entered for refunding Employer amounts as it won't be reversed with standard reversal process as not being part of employees' net payment or gross payment, hence needs to be manually adjusted on IT221.
Thanks,
Ameet