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. 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.