Question

With regard to the overwithholding of FICA taxes which of the following statements is correct? If an employee overpays in FICA tax, the employee can claim a tax credit for the over-payment. If an employer overpays its share of FICA taxes on an employee, the employer is entitled to a refund of the over-payment. FICA tax includes the social security tax, Medicare tax and federal unemployment tax. Excess withholding of FICA tax will never occur when a taxpayer has two separate employers at the same time. Excess withholding of FICA tax cannot occur if a taxpayer changes jobs during the course of the year.

Answer 1

If an employer overpays its share of FICA taxes on an employee, the employer is not entitled to a refund of the over-payment and hence employer will not get a refund, but at tax time, employee will get back any excess paid.

If an employee overpays in FICA tax, the employee can claim a tax credit for the over-payment.

Correct option is (a)

'Excess withholding of FICA tax cannot occur if a taxpayer changes jobs during the course of the year' This statement is false since excess withholding of FICA tax can occur even if a taxpayer changes jobs during the course of the year.

'FICA tax includes the social security tax, Medicare tax and federal unemployment tax'. This statement is false since FICA tax includes social security tax and medicare tax but it does not include federal unemployment tax

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