Recovering over-contribution to Social Security between two employers?
This is a common occurrence when somebody has multiple jobs in one year. The employer can't know if you have reached the annual limit. They know to stop when you have hit the maximum for their company, but don't have information on the other jobs. In fact the IRS doesn't let them factor in the other jobs. They have to keep making their payment until you hit the max for their company. When you fill out the 1040 there will be a line that checks that the total social security amount for each person was not over the annual limit. The extra will be refunded when you file your taxes. In the future if this happens again you can adjust your withholding to minimize the overage. For the example given in the question to get the 4K extra sooner, increase the number of allowances on the W-4.  You can under withhold federal income tax because you will over withhold social security tax.
"This is an unfortunate situation for you.  You have zero chance at your question number 1, if someone was going to bend this rule for you it would have happened already.  The answer to question number 2 is pursue solution number 3. The overriding issue is that the IRS makes these rules, not the employer/plan sponsor or the administrator.  You can't talk the plan administrator in to reimbursing you, their system likely doesn't even have a function to do so. FSA timing issues can be complex and I think that's the root of your issue because when an expense can be incurred (date of service versus date of payment) and when a claim must be filed are different things. It's really common to bend the rules on when a claim is submitted, but not when it was incurred.   It's really common for an exiting employee to have 30 days to submit expenses for reimbursement.  FSA expenses must always be incurred within the specified plan year, or within your dates of employment if you weren't employed for the entire plan year, this is specified by the IRS.  It seems like some wires were crossed when you asked this question.  You were asking ""can I still incur claims"" and they were hearing ""how long do I have to submit an expense that has already been incurred."" Some plans allow COBRA continuation on FSA which generally does not make sense.  Your contributions to the plan would use after tax dollars but for folks who know they have an eligible expense coming it can make sense to continue via COBRA in retain your eligibility under the plan so you can incur a claim after your employment termination. Regarding number 3.  This sort of reimbursement would be outside the plan, no precedent is necessary.  You've gotten them to claim it was their mistake, they're going to reimburse you for their mistake, it has nothing to do with the FSA. Good luck." I'm not unsympathetic, but insurance of what kind? I don't know how he'd have owned a restaurant but failed to pay into the social security system. Was he paying taxes at all?  As for the 'why,' there's not enough checks and balances to make sure that nothing is done under the table. I believe 40 quarters of work would have qualified her for a benefit of some kind, but you say she didn't pay in either. Both people didn't pay into the system, either on purpose or by not understanding the need to do so. This is a sad situation. Since your comment on @JoeTaxpayer's answer says that you are still under the 2012 contribution limits if the extra money is left in your 401k account, I do not think  that there is any problem for you if the money is left in the 401k account. As I understand it, your salary is $X for 2012 of which you contribute some percentage per paycheck to your 401k account. Your contributions  would have totaled $Y for 2012 if the glitch of extra money being out into your 401k account had not occurred. In the absence of the glitch, your W-2 form would have reported $X as gross wages, $(X-Y) as taxable wages and $Y as 401k contributions. Since an additional $z has been put into your 401k account, but not deducted from your paycheck, your employer could do one of two things. The extra money could be withdrawn from your 401k account by your employer. If this is done, then your W-2 form will be as described above. The extra money is not withdrawn by your employer. Your W-2 form will still report $(X-Y) as taxable wages, but $(Y+z) as the 401k contribution and $(X+z) as gross wages. Since $(Y+z) is less than the maximum 2012 contribution, everything is fine. In your position, I would very much prefer the latter alternative over the former, not just because there is a larger contribution to the 401k account with no change in tax liability, but also because there is always the possibility that HR/Payroll will screw up the withdrawal of the excess contribution so that it appears as a premature withdrawal by the participant. In this case,  the participant not only has to pay income tax on $z but also a 10% excise tax for premature withdrawal, without actually  getting even a penny from that $z taken out, which will go right back into the employer's coffers. So to translate that to US English: taking an early retirement in lieu of impending layoffs.  If you have a layoff you're saying you have no need for the work and if you replace the workers then they come back to sue you (which seems to be what you're saying, and we have the same concept) but an early retirement is a voluntary exit with a compensation package such that any right to sue is forfeit because it was a consensual exit rather than mandatory.  Got it.  Thanks. :) Unfortunately, the tax system in the U.S. is probably more complicated than it looks to you right now. First, you need to understand that there will be taxes withheld from your paycheck, but the amount that they withhold is simply a guess.  You might pay too much or too little tax during the year.  After the year is over, you'll send in a tax return form that calculates the correct tax amount.  If you have paid too little over the year, you'll have to send in the rest, but if you've paid too much, you'll get a refund.  There are complicated formulas on how much tax the employer withholds from your paycheck, but in general, if you don't have extra income elsewhere that you need to pay tax on, you'll probably be close to breaking even at tax time. When you get your paycheck, the first thing that will be taken off is FICA, also called Social Security, Medicare, or the Payroll tax.  This is a fixed 7.65% that is taken off the gross salary.  It is not refundable and is not affected by any allowances or deductions, and does not come in to play at all on your tax return form. There are optional employee benefits that you might need to pay a portion of if you are going to take advantage of them, such as health insurance or retirement savings.  Some of these deductions are paid with before-tax money, and some are paid with after tax money. The employer will calculate how much money they are supposed to withhold for federal and state taxes (yes, California has an income tax), and the rest is yours. At tax time, the employer will give you a form W-2, which shows you the amount of your gross income after all the before-tax deductions are taken out (which is what you use to calculate your tax).  The form also shows you how much tax you have paid during the year. Form 1040 is the tax return that you use to calculate your correct tax for the year.  You start with the gross income amount from the W-2, and the first thing you do is add in any income that you didn't get a W-2 for (such as interest or investment income) and subtract any deductions that you might have that are not taxable, but were not paid through your paycheck (such as moving expenses, student loan interest, tuition, etc.)  The result is called your adjusted gross income. Next, you take off the deductions not covered in the above section (property tax, home mortgage interest, charitable giving, etc.).  You can either take the standard deduction ($6,300 if you are single), or if you have more deductions in this category than that, you can itemize your deductions and declare the correct amount. After that, you subtract more for exemptions.  You can claim yourself as an exemption unless you are considered a dependent of someone else and they are claiming you as a dependent.  If you claim yourself, you take off another $4,000 from your income. What you are left with is your taxable income for the year.  This is the amount you would use to calculate your tax based on the bracket table you found. California has an income tax, and just like the federal tax, some state taxes will be deducted from your paycheck, and you'll need to fill out a state tax return form after the year is over to calculate the correct state tax and either request a refund or pay the remainder of the tax.  I don't have any experience with the California income tax, but there are details on the rates on this page from the State of California. One snag in your plan is that you alone can't undo your HSA contributions because you would also owe FICA taxes on that amount, and those need to be paid by both you and your employer. The only way for that to happen is for your employer to undo your HSA contributions from their point of view so those wages can be entirely taxed with both FICA and regular withholding. How that is accomplished will probably be up to them. It could mean you pulling the money out of the HSA account, and then either giving it back to your employer so they can re-allocate it with a new check, or, if you have enough pay due between now and the end of the year you could keep the money and they can reduce your next paycheck(s) by the total additional taxes due. Note that you should prefer the latter if possible, since this way you would get to keep the $1000 you shouldn't have gotten in the first place. Also, note that when you withdraw the money from your HSA account you need to inform your bank that you are undoing the contributions rather than taking distributions (and likely fill out a form). If you don't inform them they will improperly report to the IRS that you had contributions and an equal amount of distributions, which could muddy the waters with also having an FSA. You'd probably have to sue them to get the money. In most cases those statements have disclaimers all over them telling you about the vesting period and technically that extra money was probably never really in your account.  Normally the statements also break out the actual contributions from the employer match part and have a footnote about the vesting policy. Unless the employer was completely incompetent in their management of this account, I am betting they will have documentation of the policy that you supposedly were given.  You probably have very slim chances of prevailing on this unless they were very lax in their documentation. I'd say re-check the statements and your employee manually carefully for any mention of vesting. If you don't find it, ask the employer (nicely) where you were notified of this. If they still can't produce any documentation, then sue them. "If she reported the income on the business return, I'd treat this as a ""mail audit"". Try to get a clear statement from Square confirming what they reported, under which SSN/EIN, for what transactions. Make a copy of that. If at all possible, get them to send a letter to the IRS (copy to you) acknowledging that they reported it under the wrong number. Copy the IRS's letter. Square's letter, and both personal and business 2012 returns. Write a (signed) cover letter explaining what had happened and pointing out the specific line in the business return which corresponded to the disputed amount, so they can see that you did report it properly and did pay taxes on it as business income. End that letter with a request for advice on how to straighten this out.  Certified-mail the whole package back to the IRS at whatever address the advisory letter gives. At worst, I'm guessing, they'll tell you to refile both returns for 2012 with that income moved over from the business return to the personal return, which will make everything match their records. But with all of this documentation in one place, they may be able to simply accept that Square misreported it and correct their files. Good luck. The IRS really isn't as unreasonable as people claim; if you can clearly document that you were trying to do the right thing, they try not to penalize folks unnecessarily." You have several options: If they refuse the second option, and the incident has already happened look on the HSA website for the form and procedure to return a mistaken distribution. I have used the two options with all our medical providers for the last 3 years. Some preferred option1, some preferred option 2, but none refused both. One almost did, but then reconsidered when they realized I was serious. While there is an April 15th deadline to resolve the mistake, I have found that by requesting the provider accept one of the two options the number of mistakes is greatly reduced. This is not your problem and you should not try to fix it. If your employer paid money into someone else's account instead of yours they should ask their bank to reverse it and should pay you your wages while they are waiting for this to be done. No bank will let you do anything about money paid by someone else into an account that is not yours, or give you details of someone else's account. "The $10,400 is in the question, in two pieces.  His employer withheld $8000, and her employer withheld $2400.  Thus they paid together $10,400 in income taxes, which are deductible if you itemize deductions and choose income taxes over sales taxes (you can deduct one or the other).  There's nothing ""standard"" about the amount, though it is standard to take the income tax deduction (almost always higher than sales tax)." There's nothing much you can do here, and I don't think you'll succeed in placing blame on the lawyers. In order for SSA to have the tax withheld from your benefits, you need to submit form W-4V. Here are the details on how to get it and what to do with it. This form is voluntarily submitted, i.e.: no-one will ask for it, you have to actively send it out on your own. As to repayment of the LTD benefits - since they were not taxable, there's no change in the taxable income on your behalf. What you got wasn't taxed, so what you gave back - doesn't provide any tax benefit. As to why SSA benefits are taxable and LTD benefits are not - this is because SSA is pre-tax, and LTD premiums were (in your case, apparently) post-tax. However, the LTD benefits management company doesn't care or may be even know about this, and they do everything they can to reduce their own liability to you. If you're entitled to SSA benefits, it reduces their liability, that's why they insisted on your claim with SSA. As to the SSA dragging their feet - they want to reduce their (taxpayers', essentially) liability as well. However, once they decided in your favor, you received what was rightfully yours, including back-pay. SSA benefits are taxable, in the year received. So you got a lump sum - taxable as a lump sum. Sorry, but that's the way it is. This is an example where post-tax LTD premiums don't actually pay off... Ask for documentation proving the amount they say you were overpaid, and ask for time to review their claim. If it is a large amount that they can prove you owe, and if you were staying, then you could ask for the repayment to be spread over multiple pay checks. This would avoid the situation where you could get a very small check or even a check for zero. Because you are leaving, you could ask for time to reimburse them, but don't count on them agreeing to that deal.  The lesson is to save all time cards, especially ones in which your hours are not consistent. Also save all pay stubs for the year. What you should do now is download all the time card and pay info on the website, before you lose access to it. These should be saved on your home machine, or printed and kept at home. Check to see if they made any time card adjustments. Many systems keep track of all changes made by the employee and by management; both before and after the employee signs the time card. If there are change you should be able to ask them to explain the changes. There are still ways that the default values on the W4 can lead you to get a refund or owe the IRS. If there was a big delta in your paychecks, it can lead to problems. If you make 260,000 and get 26 paychecks that means each check had a gross of 10,000. Your company will withhold the same amount from each check. But If you earned a big bonus then the smaller regular paychecks may not have been withholding enough.  When bonus checks are involved the payroll office has to treat them as irregular pay to be able to make it work out. Some companies don't do this, so you may under or over pay during the year. If you changed companies during the year, this can lead to under or over payment. The lower paying company would not know about the higher rate of pay at the other company. so at one you would under pay, and the other you would over pay. There are also social security issues with more than one employer. Apple is currently the most valuable company in the world by market capitalisation and it has issued bonds for instance. Amazon have also issued bonds in the past as have Google. One of many reasons companies may issue bonds is to reduce their tax bill. If a company is a multinational it may have foreign earnings that would incur a tax bill if they were transferred to the holding company's jurisdiction. The company can however issue bonds backed by the foreign cash pile. It can then use the bond cash to pay dividends to shareholders. Ratings Agencies such as Moody's, Fitch and Standard & Poor's exist to rate companies ability to make repayments on debt they issue. Investors can read their reports to help make a determination as to whether to invest in bond issues. Of course investors also need to determine whether they believe the Ratings Agencies assesments.