Did you pay extra social security, Medicare, and withholding tax on certain fringe benefits during 2013 because of this year’s tax law recognition of same-sex marriage? Whether you’re an employer or an employee, you can claim a refund of the overpaid taxes. Here’s how.
You can correct overpayments for amounts withheld from employee paychecks throughout 2013 by repaying or reimbursing employees before December 31.
Then, under a special, simplified rule in place for this year, you can include the change on your fourth quarter federal payroll return (Form 941). You do this by reducing the amount of wages (and withholding if applicable) reported on that return. Choosing this option means you won’t have to file amended Forms 941 for the first three quarters of 2013.
What if you do not make the repayments or reimbursements before year end? You’ll need to complete your fourth quarter federal payroll tax return without making adjustments, and file an amended return later. You can file one amended return for the fourth quarter that includes adjustments or overpayments for the entire year.
However, be aware that under this method you cannot correct for the federal income tax withheld from employees. You may also need to file amended Forms W-2 when you choose this option.
Do you need to make adjustments for prior years? For purposes of this change, the rules say you can file a single Form 941-X for each year, instead of the usual four. Remember to amend other affected returns, including Forms W-2.
If you overpaid federal income tax in prior years because your spouse’s fringe benefits were taxable, you may want to file Form 1040X to obtain a refund. You’re not required to amend, so be sure the overall tax effect is beneficial to you.
Contact us for more information.