This article is about Justworks PEO. What product am I using?
Social Security tax is applied to all wages (with the exception of certain pre-tax deductions) earned by W-2 employees, up to a limit set each year by the IRS. The wages that were subject to Social Security tax are recorded in Box 3 of Form W-2.
In rare instances, employees on the Justworks PEO may find that the amount in Box 3 of their Form W-2 exceeds the IRS’ Social Security tax limit. Please see below for explanations of these scenarios and their remedies.
You received disability or paid leave payments from MetLife
If you received disability or paid leave payments from MetLife, these payments are included in your W-2, as demonstrated by an X in the “Third party sick pay” box within Form W-2 Box 13. These payments were subject to Social Security withholding regardless of how much you had previously earned from your employer. In this case, please email support@justworks.com so we can update the W-2.
You worked for multiple companies who use Justworks
Under Internal Revenue Code 3511 and related IRS rulings, when an employee works for more than one employer with the same Professional Employer Organization (PEO) entity in a calendar year, the PEO (i.e. Justworks) is required to calculate and withhold Social Security taxes separately from each employer, applying a separate Social Security limit to the wages earned from each company. As such, it is common that an employee who is paid by more than one employer on Justworks in a single year will see an excess—but not erroneous—withholding of Social Security taxes.
Additionally, in circumstances where an employee works for more than one employer with the same PEO entity, the employee will receive a single Form W-2 from Justworks that reports income across both employers, as is standard practice for PEOs—this is not a mistake.
I worked for multiple Justworks customers and only received one Form W-2:
As mentioned above, this is not a mistake. However, given the unique tax-reporting nature of PEOs, if your combined Social Security withholdings in Box 3 exceeds the annual limit, this may be incorrectly flagged as an employer error by tax preparation software when attempting to file your taxes. In these situations, here’s what you should keep in mind:
- It may be best to work directly with an accountant or tax preparer to file your personal income taxes (avoiding e-filers that may pose technical limitations).
- Your tax preparer can request a credit for the excess Social Security withholdings via IRS Form 1040, Schedule 3, on line 11.
If your provider needs further clarification regarding the PEO filings as outlined in Internal Revenue Code 3511 and related IRS rulings, you can request a letter to substantiate the information above and validate Box 3 on your Form W-2 by emailing Customer Support at support@justworks.com.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.