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My employer withheld FICA taxes and generated a W-2 based on it.

I see the error and report it to them. Now they are refunding the FICA taxes and will issue a W-2c. They tell me I can proceed and file tax returns with my old W-2 as FICA withholdings do not impact my taxable wages.

Is that okay ? Or should I wait for the W-2c ?

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It is not OK and you should wait for the corrected W2.

Overpaid FICA taxes count toward your income tax liability as if it was income tax withheld. They go on line 71 of your tax return. So if you enter the numbers from your W2 into your tax software, and then the IRS matches it to the corrected W2C - you'll get an audit on your hands.

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  • Could you explain "Overpaid FICA taxes count toward your income tax liability as if it was income tax withheld." in simpler terms ? Sorry I did not understand it.
    – Viraj
    Mar 1, 2016 at 19:46
  • See instructions for line 71 of the form 1040. Overpaid social security is counted towards your income tax liability. The reason the employer wants to fix this is because they'd get their half back, but for you - it doesn't matter. However, if they correct the W2, the amounts would shift between the lines of your tax return.
    – littleadv
    Mar 2, 2016 at 5:17

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