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Bill
Bill, Enrolled Agent
Category: Tax
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Experience:  EA, CEBS - 34 years experience providing financial advice
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When computing information for a 941 form - WITH PENSION ...

Resolved Question:

When computing information for a 941 form - WITH PENSION DEFERRALS - IS THE PENSION DEFERRAL PORTION TAXABLE FOR SOCIAL SECURITY W/H AND MEDICARE W/H?
Submitted: 6 years ago.
Category: Tax
Expert:  Bill replied 6 years ago.
Contributions by employees via salary deferrals to retirement plans such as a 401(k) or 403(b) plan are taxable for social security and medicare W/H. Employer contributions (SEP, pension, discretionary, or matches) are not subject to FICA taxes
Customer: replied 6 years ago.
IS EMPLOYER SHARE OF MEDICARE TAXABLE?
Customer: replied 6 years ago.
Hi Bill,

You said employer share of pension deferrals are not taxable for FICA. I had also asked about Medicare. Is the employer share taxable.

Thank you in advance for response to this question.

Glenna
Expert:  Bill replied 6 years ago.

Yes, that is correct. Medicare taxes are not paid by the employee nor by the employer on any employer (pension, discretionary) contributions. On employee contributions made through salary deferrals both social security (up to $102,000) and medicare (on all income) taxes are paid by the employee and the employer.

Customer: replied 6 years ago.
You just contradicted your answer. At one point you said employee and employer did not pay Medicare and FICA and then you said they should. You hae me confused. Please review your last statement.
Customer: replied 6 years ago.
You just contradicted your answer. At one point you said employee and employer did not pay Medicare and FICA and then you said they should. You hae me confused. Please review your last statement.
Expert:  Bill replied 6 years ago.

My last answer and my first one state the same thing. I am differentiating between who makes the contribution (the employer or the employee). On employer contributions (not employee contributions) neither the employee nor the employer pay any FICA social security nor medicare taxes. The employer contributions I am referring to are contributions that are only made by the employer such as pension contributions, matches on 401(k)s, and discretionary employer contributions to a profit sharing or 401(k) plan.

On employee contributions that are made only by employees via salary or elective deferrals from an employee's pay the employee pays both social security and medicare taxes and the employer also pays both social security and medicare taxes on the employees compensation (only up to $102,000 on the social security portion).

When I used the word FICA taxes I was referring to both social security and medicare taxes.

http://definitions.uslegal.com/p/payroll-taxes/

 

Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3078
Experience: EA, CEBS - 34 years experience providing financial advice
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