Federal New Hire Act

Carolyn07

If an employee fills out the Form W11 (Hire Act) because they meet the guide lines then later gives us paper work that they are a J-1 Visa not subject to Social Security, Medicare can the employer still take the credit for ER part bc they qualify. Thanks for your help.

:?

Carolyn

pattypa

Logic tells me if the taxes shouldn't have been withheld in the first place, there is no credit TO take, because there is no employer liability to start with.

Have you already deducted SS taxes and filed the quarterly return to which they belong? If so, you're going to have to amend the return anyway; your overpayment will just be half of what it would otherwise be, because you didn't pay the employer share in the first place.

Patrick Haggerty

It is NOT a credit - it is an exemption from tax otherwise payable.
And pattypa's logic seems good to me - particularly given the answer to one of the FAQs on the IRS website:

(05/06/10) PE6: How does the social security wage base affect the payroll tax exemption?
A-PE6: The exemption is applicable to wages that would otherwise be subject to the employer’s share of social security tax (i.e., wages up to the social security wage base) that are paid to qualified employees from March 19, 2010, through December 31, 2010. The employer is still liable for the employer share of Medicare tax on all wages and for withholding both the qualified employee’s share of social security tax on wages up to the social security wage base ($106,800 for 2010) and Medicare tax on all wages.

http://www.irs.gov/businesses/small/article/0,,id=220750,00.html