FICA refunds due on ‘excess’ mass transit fringes — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

FICA refunds due on ‘excess’ mass transit fringes

Get PDF file

by on
in Office Management,Payroll Management

Congress’ last-minute and retroactive reinstatement of parity between mass transit benefits and employer-provided parking—to $250 a month for both, for 2014 only—is no favor to Payroll. If you allowed employees to defer more than $130 for mass transit benefits last year on an after-tax basis, or paid out of the company’s coffers, they and you are due FICA refunds on the difference—up to $120 a month.

Since you’ve filed your 2014 fourth-quarter Form 941, the normal Form 941-X procedure applies. File Form 941-X for each quarter of 2014 you’re correcting. You must repay or reimburse employees, or for refund claims, get their consent to file a claim on their behalf, before you file Form 941-X. Then file your form by April 30. Heads up: You can’t refund any additional Medicare taxes to employees.

If you haven’t e-filed your 2014 W-2s (e-filed forms are due March 31), and you repaid or reimbursed employees the excess FICA taxes, check the Void Box at the top of each incorrect W-2 (Copy A), and prepare new W-2s for employee with the word “CORRECTED” written on the top of Copies B, C and 2. File the corrected Copy A by March 31. If you’ve already filed your W-2s, issue Forms W-2c to employees, and file Forms W-2c/W-3c to account for the decreased FICA taxes. (Notice 2015-2, IRB 2015-4)

ALL ABOARD: Preempt employees’ confusion about receiving a new W-2 or a W-2c form by including a memo explaining the adjustment. The IRS stressed that employees can’t defer more than $130 a month on a pretax basis for mass transit fringes this year.

Leave a Comment

Previous post:

Next post: