Excess Social Security Withholdings with same PEO

pzpzpzp1

I had 2 jobs but both jobs use Sequoia PEO for payroll services. That means I only get one W2 form AND Sequoia needs to withhold social security tax up to the 10,918 limit for 2025 for BOTH companies. As a result, they have in aggregate withheld a lot of excess social security.

FreetaxUSA is not reading this situation correctly and has not placed anything in Schedule 3 for crediting me back the excess. FreetaxUSA's recommendation is to go back to the employer because it thinks that I had one employer, but in fact I had two. I have combed the IRS.gov website documentation on this.

In the exceptional case that one PEO handles two jobs for one employee and withholds excess social security, it should be credited back through Part ii, box 11 "Excess social security and tier 1 RRTA tax withheld". IRS instructions explicitly say this is not a case where you go back to the employer or the PEO to resolve. FreetaxUSA is not filling in that box correctly. This is a bug in the software. How can I get this fixed?

MatthewD

Hi pzpzpzp1,

A test of our software shows that the software correctly handles this situation when two or more W-2s, for the same person, are entered and there is excess social security tax withheld. However, when you have just one W-2, then this is an employer issue and you should contact them to make the correction. Here is the alert you may have received if you only entered entered one W-2.

"Usually your Social Security tax withheld will be 6.2% of your Social Security wages in Box 3, with a maximum of $10,918.
If you need to make changes, go back to the Wages (Form W-2) screen.
If this is correct, contact your employer and request that they refund the excess Social Security tax back to you."

I recommend you contact Customer Support and ask a tax specialist to look at your account and return. And contact your payroll service to make a correction and refund excess SS withholdings.