Employer Fica Match (2 jobs)?

Question

This is a simple question, but complex to explain perhaps, but here goes nothing:

I have 2 jobs. Job 1 will max out my social security contribution as my pay is >97500. Job 2 is a home business, with me as the sole employee.

Question:
I know that if I withhold social security from job 2, I will personally get a refund at tax time (happened this year). BUT, my home business, which has to match the contribution, does not get a refund. So, can I simply not deduct social security from my job 2 paycheck? And, correspondingly, can I avoid the company match altogether by doing this?

Or, will the IRS look from a company point of view and say "you have to match the first 97500 from each employee, period"? The employee can then get a refund, but the company is out of luck.

Answer 1

If your second job is through a corporation, LLC, or partnership, and you are considered an employee, there is no way around the entity not paying their share of the tax.

If your second job is a sole proprietorship, you do not deduct any taxes from your check. Taxes are taken care of on your 1040 on Schedule 1040 and Schedule SE, not through your check.

Answer 2

Some depends here on how your business is set up - is it a corporation, s-corp, sole proprietorship?

If you're doing a schedule C for your home business, you calculate the two halves together on form SE. Form SE limits the amount that you pay ss tax on to the maximum, so it's not an issue - there's no overpayment and nothing to refund. Look at the form - you'll see where, for income over the 2006 max of $94,200, you don't pay the ss part, just the medicare part - the limit doesn't apply to the medicare part.

If you actually had two jobs for two employers, then you'd get the extra refunded, but the company would not.

If your business is a corporation, that's a separate entity from you as a person, and files its own return, so I'm guessing it would get treated like an unrelated employer, and the company would still pay the full match. This is a guess though, so check it out with a CPA or with the IRS.

Answer 3

depending on the job description, what they are proposing might be illegal - the employer can't just decide not to withhold taxes from everyone - only people properly classified as independent contractors and what determines that is how much oversite management has in guiding your daily activities and the precise type of work - for the employer - they save on employers share of FICA and they will not be paying unemployment taxes - for the worker - very bad - you have to pay your own taxes including the employers share of FICA and since you won;t be eligible for unemployment, if they terminate you - you get no unemployment benefits - without knowing the position they offered you I can;t tell they are being illegal, but I'm guessing they are since they made it clear up from about the taxes. if the gross salary is in line with a regular salaried position for the same job title - I would ask for at least 25% more - plus if they don;t pay medical benefits - you'll have to pay for those out of your own pocket and just for a single person - that may be close to $400 per month (about $4 per hr before tax) - you should ask for that additional amount also on top of the extra 25% and that may not be enough to risk it because of the unemployment issue and being a startup - the risk is here that the company won't last. If their offer was for a permanent position and not a project with a set end date - they can't pay you like an independent contractor - illegal

Answer 4

Use Section B on the second page of Schedule SE. This will allow you to calculate your Self Employment tax taking into account FICA withholding from wages.

Remember Social Security's cap is $94,200, but Medicare has no cap.