Refund of overpaid Social Security taxes; Bad Debt write off
Not what you're looking for?
8 When could overpayment of Social Security taxes occur? How does one go about getting a refund of excess Social Security payments?
9 How is the write-off of a bad debt handled on the tax return? How does the debtor have to handle the forgiveness of the debt? Why?
Purchase this Solution
Solution Summary
The 496 word cited solution explains how social security taxes could be overpaid and how they are refunded. Bad debt and debt forgiveness are discussed including the tax ramifications of both.
Solution Preview
8. The overpayment of social security taxes occurs when a highly paid employee changes job mid-year. The new employer is required to deduct social security taxes as if the employee had no other earnings during the year. For example, in 2008 the payment of social security tax was computed on the first $108,000 of earnings in that year. If an employee earned $100,000 on the first job and $50,000 on the second job, there would be excess social security tax withheld on $42,000 of total earnings.
It doesn't matter which company withheld the excess because of the way in which the refund is handled. When the employee prepares his or her personal return for 2008, the excess is reported as a refundable amount and included in any tax refund the ...
Purchase this Solution
Free BrainMass Quizzes
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
Operations Management
This quiz tests a student's knowledge about Operations Management
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)