Hello,

I am a W2 employee but i just realized that my employer is recovering their portion of the FICA/SS/medicare from my paycheck before the gross amount is calculated. I have a monthly excel sheet showing my actual gross payout vs the "gross payout" listed on my w2. how do I handle this? I am effectively paying taxes like a self employed person or independant contractor but lose all the benefits becasue i am effectively W2. Is there some way around this? Can I use the emailed excel sheets as "offical tax documents" to back myself out of the W2 and claim some self employment tax deductions?

Thanks for the help!!!

Daniel

“I am a W2 employee but i just realized that my employer is recovering their portion of the FICA/SS/medicare from my paycheck before the gross amount is calculated. I have a monthly excel sheet showing my actual gross payout vs the "gross payout" listed on my w2. how do I handle this?”==========> A common reason ERs treat their EEs as contractors is to avoid FICA tax/State unemployment or possibly FUTA tax liability. When you were hired he probably had you sign an employment agreement that stated that you were an independent contractor and as such you would be issued a 1099 form instead of a W-2 and that you were responsible for your own taxes and social security. This is a normal business practice in industries where there is a large personnel turnover or for short term employment needs. There are specific rules on who can be considered an I.C. versus an EE of a company. The major issue on whether you are an independent contractor is the amount of control your boss has over time your time and duties. I.e. do you have to be in the office from 9-5? Does your boss dictate and control the assignments? Are you able to work from remote locations? As a general rule, if you have to be in the office and your boss controls the hours you are there, the work that is performed, the order it is performed in, etc... then you cannot be considered an IC. If your ER has claimed you, an EE, as an independent contractor, the IRS may hold your ER responsible for employment taxes for you; there are steeper penalties for "willful neglect" as well under Internal Revenue Code Section 3509.

“ I am effectively paying taxes like a self employed person or independant contractor but lose all the benefits becasue i am effectively W2. Is there some way around this?”======>In general, misclassifying an EE as an IC can result in costly IRS fines and penalties for the ER.. An IC provides services for the ERbut is not an actual EE and not subject to EE federal tax withholding. Failing to correctly classify EEs can result in costly errors from an audit of theER’s previously filed returns. A penalty of 5 percent of the tax amount that the ER should have shown on Form 941 could be levied. The maximum fine is 25 percent of the tax amount. An ER who fails to make the required tax deposits because he misclassified an EE might have to pay a deposit penalty of 2 percent to 15 percent of the calculated deposit amount. An accuracy penalty of up to 20 percent of the tax underpayment might apply to anER who the IRS finds was negligent in EE classification. The same penalty applies if the ER significantly understated the amount of federal taxes due on a return because of the error.i guess you can contact the IRS for more info in your issue.


“ Can I use the emailed excel sheets as "offical tax documents" to back myself out of the W2 and claim some self employment tax deductions?”===========> you can take a deduction for half of your Self-Employment Tax on li 27 1040.I guess you can use it as a proof. I am not sure why you want to use Excel for taxes when there are so many programs and Web sites that are better-suited to the job, and functional problems in Tax Assistant for Excel make it even less attractive.

Hello thank you for the reply but I think I need to clarify a few things

I currently am classified as a W2 employee.

Listed on my weekly pay stub I am only paying the employee share of FICA/SS/Medicare. However, my employer emails me a monthly gross payout in excel format and the gross amount differs from the gross amount in my pay stub. I asked my employer and they said that they are recovering their ER share from my payout before it hits my pay stub.

For example:
$10,000 Gross payout emailed amount in excel format
$9,400 gross amount listed on pay stub

As you can see my employer took $600/6% from my actual gross earned wages

They took this $600 is off the top to reimburse their employer portion of FICA/SS/Medicare.

My issue is that I am effectively paying self employment tax but classified as a W2 employee.

Do I lose the eligibility for write offs of half the self employment taxes because of how my employer recovered their portion from me in a way that is not officially documented.

This transaction indicated above is only documented thru the differences in gross wages amount from excel sheet emailed from my employer vs what is listed on my pay stub.

Thanks, I hope this clarification helps you better understand my situation.

Daniel

“They took this $600 is off the top to reimburse their employer portion of FICA/SS/Medicare.”======>BASICALLY, as you can see, ERs and their EES share responsibility for FICA taxes. ERs must withhold FICA taxes from their EEs’ paychecks and forward that money to the government. ERs also pay a share of FICA taxes themselves. So, your ER is responsible for paying 7.65% of taxable gross wages to the feds (social security 6.2% and Medicare 1.45%). The ER is also required to pay into the federal and state unemployment funds. Your ER MUST match the employee's/your social security and medicare payments with his own money, NOT from your paychecks.Your ER, on his Sch C of 1040, line 23,can deduct FICA tax payments matched for you.
“ My issue is that I am effectively paying self employment tax but classified as a W2 employee. Do I lose the eligibility for write offs of half the self employment taxes because of how my employer recovered their portion from me in a way that is not officially documented. This transaction indicated above is only documented thru the differences in gross wages amount from excel sheet emailed from my employer vs what is listed on my pay stub”=============> You are not an IC but an EE so you can’t deduct half of the self employment tax as you do not file Sch C/ SE. I mean you actually do not pay SECA tax to the IRS. The tax code has separate penalties for an ER’s failure to pay FICA taxes, depending whether the taxes in question are the ER’s portion or the EE’s portion. When it's the ER’s portion, the ER can be charged a penalty of up to 5 percent of the unpaid amount for every month it goes unpaid, up to 25 percent of the tax due. I guess you need to contact your ER for refund or the IRS for more accurate info in detail.The IRS may contact your ER.