Posted on 06/27/2015 7:59:27 PM PDT by George from New England
Been looking for an internet forum to ask a few questions and interface with others in the know.
My wife has an employee/employer job. I am self employed. I am on her employer's health insurance. They deduct premiums every two weeks from her paycheck. Example: 800-200, net 600 There has been lawful pre-tax med calculations being done meaning ss tax is paid on the 600 not 800.
Now we find this is directly impacting her benefits when she retires, 3 years hence.
Can this be changed going back a few years and tax returns amended to reflect this?
Has the employer been only paying 6.2% of the 600 or have they been paying 6.2% of the original pre-med 800?
It appears the employer might be actually been paying less toward her ss because of this medical deduction.
Hoping to find a forum where posters might have encountered this in their life. I really don't have the monies due to this discovery to hire an accountant.
Thanks for all that the good freepers can contribute.
No clue. But, I will bump the post.
SSA taxes are calculated on the gross not on the net after insurance and 401k. Take a look at last year’s W2 and you will see that SSA wages in box 3 is higher than wages in box 1. Income tax is calculated on box 1 but FICA is calculated on box 3.
Here is a sample W2 to see what I am talking about.
http://www.irs.gov/pub/irs-pdf/fw2.pdf
As to whether you can force an employer to not count medical insurance as medical retroactively, I have no idea. I'd be willing to bet that he'd have to recharacterize all employees' paychecks and that is extremely unlikely to happen.
I’m confused.
(a) Wages - $1,000
(b) Health insurance - $100
Taxable for SS purposes - (a) minus (b)
(c) 401(k) contribution - $150
Taxable for income taxes - (a) minus (b) minus (c)
So SS wages are $900 in this example, tax return wages are $750.
And no, you can’t go back and try to re-characterize a deductible health care cost as a non-deductible cost. Taxable social security wages are defined in the law. Even if you could re-characterize them, that would increase your income tax returns for the years involved.
You are out of luck.
Section 125 (sound familiar?) of the Internal Revenue Code (Ronald Reagan 1986) allows an employer to offer benefits to employees which are exempt from FICA and Federal income tax. For instance if you make $1000 per week but your employer charges you $200 for your benefits it’s as if you only ever made $800 for tax purposes! As long as you signed a form saying you’re happy to do this.
Now if you wanted to go back on this agreement years later I’m sure they would look at you sideways and be happy to charge you ALL the back taxes they could find, with interest.
Perhaps the solution is to calculate your tax savings and invest the difference. That would be the prudent and conservative solution IMHO
On this very w-2 statement the amount in Box 1 is the same as in box 3.
Neither is the gross wage.
In the bottom right area there are two different values.
They are $5400 different apart, the amount of the medical payments.
Both box 1 and 3 are the lesser amount, the reported wages.
So I cannot agree with an assertion you make.
That link only hangs for me, can you post the content of that irs pdf page, sample?
Thanks.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.