Do I care if Social Security Withheld is very wrong on W2?

[NECPA in NEBRASKA]

I really hope that this is not a problem. My client is building a house and needs her refund. Box 3 is $83113 and box 4 is $3,787. Unless I am crazy, box 4 should be $5,153. Medicare is correct. It's a Defense Finance Civilian W2. I don't know why it's screwed up, but it does not affect her 1040. She moved to another state and maybe they messed up her payroll records then.

I checked for new Care Act changes that would cause this, but I could not see anything.

Thanks for any advice.

Bonnie

[jklcpa]

Just enter W-2 as it was issued. It's possible that the W-2 is correct if the employer elected to defer the employee's FICA withholding between 9/1/-12/31/20 as described in Notice 2020-65.  Here's the IRS brief summary, and the notice is accessed by clicking the "guidance" link in the first sentence.

https://www.irs.gov/newsroom/guidance-issued-to-implement-presidential-memorandum-deferring-certain-employee-social-security-tax-withholding

[Jim Oh Bkkr]

And at the time, there were discussions that some federal agencies started doing this by default.

[Possi]

I see it on every military W2. 

[NECPA in NEBRASKA]

Thanks! This is the first DOD w2 that I have done yet this year, since I am so far behind.

[RitaB]

I just have to say I love the title of this thread @NECPA in NEBRASKA.  This is me every day about something.  Like yesterday, I actually had a Covid early distribution with Code 2.  I looked around for hidden FBI cameras and thought about completing Form 8915 (which I have called 8715 for six weeks), for a very long time before I stuck it in the stack. 

[TexTaxToo]

And then there is the requirement that employers issue a W-2c when they do withhold the additional SS tax:

https://www.irs.gov/forms-pubs/form-w-2-reporting-of-employee-social-security-tax-deferred-under-notice-2020-65

Which can be ignored unless they held multiple jobs and this results in too much SS tax withheld, in which case, amended return!

[schirallicpa]

I've seen quite a few goofy FICA withholdings.  I suspect this is all going to snowball at some point.

[Medlin Software, Dennis]

13 hours ago, TexTaxToo said:

And then there is the requirement that employers issue a W-2c when they do withhold the additional SS tax:

https://www.irs.gov/forms-pubs/form-w-2-reporting-of-employee-social-security-tax-deferred-under-notice-2020-65

Which can be ignored unless they held multiple jobs and this results in too much SS tax withheld, in which case, amended return!

And while I do not have a specific reference, if the employer somehow does not collect the deferred amount from the employee, that itself becomes an addition to wages, requiring additional paperwork (and liability for both parties).  The perfect example of how playing with withholding is a lose/lose for employer and employees.

My customers are just now starting to deal with the effects of the no allowance W4 forms as employees are finally cleaning up their withholding (wanting more withheld) and submitting new W4 forms.  Those employees who were claiming 0 or 1 allowance complain their new W4 gives LESS WH, then the employer tells me my calculations are wrong, and I have to spend time educating the employer to be able to explain to the employee.  At the same time, I try to teach the employer the calculation "is" the calculation, and the employee has the ability to provide new W4 forms until they get the result they are after.