16 Just curious - has anyone successfully gotten their employer to issue a corrected W-2 for this situation instead of waiting to claim it on taxes? My payroll person suggested this might be possible but wasn't sure of the process.

This is such a frustrating situation that so many people face! I went through the exact same thing last year with my part-time consulting gig. One thing I discovered is that some employers are more willing to work with you if you can show them the specific IRS guidance. Publication 15 (Circular E) actually addresses this scenario and explains that while employers must withhold SS tax up to the wage base, they can stop if an employee provides sufficient documentation that the limit has been reached across all employers. The key is presenting it as helping THEM avoid potential administrative headaches rather than just asking for a favor. When I framed it that way - explaining that continuing to withhold would just create unnecessary paperwork when they eventually have to reconcile everything - my employer was much more receptive. Also worth noting that if you're planning to stay at both jobs into next year, this same issue will come up again in 2024 with the new wage base limit. Might be worth establishing the process now so it's easier to handle next year!

Just wanted to share my experience since I had this exact same question a few months ago! In my case, "Medical EE - SR" stood for "Medical Employee - Standard Rate" which was my contribution to the company health insurance plan. What really helped me was requesting a detailed breakdown of all deductions from payroll. Most companies are required to provide this if you ask, even if it takes them a while to respond. They sent me a document that explained every single code on my pay stub, which was super helpful for understanding not just the medical deduction but also things like life insurance, disability, and other benefits I didn't even know I had. The $87.50 biweekly amount sounds about right for employee-only standard tier coverage. One thing I'd suggest is making sure you're actually using the benefits you're paying for - I discovered I was paying for dental coverage that I never used because I already had dental through my spouse's plan. Saved me about $30 per paycheck once I dropped the duplicate coverage during open enrollment. If your HR is slow to respond via email, try calling them directly or stopping by in person if possible. Sometimes a quick 5-minute conversation can clear up what might take weeks of back-and-forth emails to resolve.

I had this exact same confusion when I first started working! "Medical EE - SR" typically means "Medical Employee - Standard Rate" and represents your portion of the health insurance premium that gets deducted from your paycheck. The "EE" definitely stands for "Employee" to distinguish it from employer contributions. One thing that really helped me understand all my deductions was downloading my pay stub and looking at it alongside my benefits enrollment materials. Most companies provide a benefits guide during onboarding that breaks down all the different plan options and their costs. If you can't find yours, definitely ask HR for a copy - it should show exactly what "SR" means at your specific company (could be Standard Rate, Senior Rate, or even Single Rate depending on your employer). The $87.50 biweekly amount seems very reasonable for employee-only health coverage. That works out to about $2,275 annually, which is actually on the lower end for decent health insurance these days. Just make sure you're enrolled in the plan that makes the most sense for your healthcare needs - sometimes people pick the middle-tier option without really comparing what they'd actually use versus the cost savings of a basic plan. If HR is being slow, try giving them a call directly rather than email. In my experience, a quick phone conversation often resolves these questions much faster than waiting for email responses!

One thing to watch out for if you're new to S-Corp health insurance reporting - make sure you understand the timing requirements. The health insurance premiums need to be paid by your S-Corp during the tax year to qualify for the deduction in that same year. I learned this the hard way when I tried to reimburse myself in January for premiums I had personally paid in December of the prior year. The IRS doesn't allow that - the S-Corp itself must make the payments directly to the insurance company or through payroll during the actual tax year you're claiming the deduction. Also, if you have employees, you'll need to make sure health insurance is available to them on the same terms, or there are specific ownership percentage rules that apply. This gets complex quickly if you have other shareholders or employees, so definitely consult a tax professional if your situation isn't straightforward single-owner S-Corp.

This is exactly the kind of confusion I went through when I first elected S-Corp status for my LLC! One thing that really helped me was creating a simple monthly checklist to stay on top of the health insurance reporting requirements. Here's what I do now: At the beginning of each year, I calculate my total expected health insurance premiums and make sure my S-Corp has enough budgeted for payroll taxes on that additional compensation. Then each month when I process payroll, I include 1/12th of the annual health insurance amount in my W-2 wages, even if the actual premium gets paid at a different time in the month. This approach keeps everything consistent and makes year-end much smoother. I also set up a separate business checking account specifically for employee benefits (even though I'm the only employee), which makes tracking these payments super clear for my bookkeeper and accountant. The key insight that took me a while to understand is that you're essentially paying yourself additional wages equal to the health insurance cost, then taking a personal deduction for those same premiums. Once you think of it that way, the whole process makes much more sense!

This is a really troubling situation that unfortunately happens more often than people realize, especially with smaller companies that don't have dedicated payroll departments. Your sister and her coworkers are dealing with what's essentially employer negligence in payroll tax compliance. First thing - they need to act fast. The company is legally obligated to withhold federal taxes, and their failure to do so doesn't absolve employees of their tax liability, but it does give them grounds for penalty relief from the IRS. Here's what I'd recommend: 1. **Document everything immediately** - Get copies of all paystubs, W-4 forms, and any communication about the direct deposit switch 2. **File taxes on time** - Even if they can't pay, filing prevents failure-to-file penalties which are much worse 3. **Contact the IRS** - Set up payment plans and request penalty abatement due to "reasonable cause" (employer error). The IRS is often willing to waive penalties when underpayment wasn't the taxpayer's fault 4. **Approach the employer as a group** - There's strength in numbers, and this affects multiple people. The company may be willing to provide assistance or bonuses to help with the unexpected tax burden 5. **Report to appropriate agencies** - File complaints with both the IRS and Department of Labor about the employer's failure to comply with withholding requirements The company could face serious penalties for this, so they have strong incentive to work with the employees to resolve it. Don't let them dismiss this as "just a mistake" - people's financial wellbeing is at stake here.

This is a really serious situation that your sister and her coworkers need to address immediately. Unfortunately, what happened to them is not legal - employers are absolutely required by federal law to withhold income taxes, Social Security, and Medicare taxes from employee paychecks. The fact that this happened to multiple employees when they switched to direct deposit suggests either a major payroll system error or negligence on the company's part. Either way, the company is liable for failing to meet their legal withholding obligations. Here's what they should do right now: **Immediate steps:** - Gather all paystubs and direct deposit records to document the lack of withholding - File their tax returns on time even if they can't pay - this prevents additional failure-to-file penalties - Contact the IRS to set up payment plans (they have reasonable monthly options) **Dealing with the employer:** - Approach management as a unified group - there's power in numbers here - Demand immediate correction of the withholding going forward - Ask if the company will provide financial assistance (bonuses, etc.) to help with the unexpected tax burden - Get everything in writing - no verbal promises **Penalty relief:** They should absolutely request penalty abatement from the IRS based on "reasonable cause" since this was employer error, not their fault. The IRS often waives penalties when underpayment resulted from circumstances beyond the taxpayer's control. They should also consider reporting this to the Department of Labor and filing a complaint with the IRS about the company's failure to comply with employment tax laws. The company could face significant penalties, which gives them strong incentive to help resolve this situation. Don't let the company brush this off as a minor mistake - people are facing serious financial hardship because of their failure to follow federal tax law.

This is such a comprehensive discussion on S-Corp partnership accounting! As someone who's been managing these complexities for several years, I'd like to add a few practical tips that have helped me streamline the process. First, I highly recommend creating a quarterly reconciliation schedule that tracks your K-1 income estimates versus actual distributions received. Most partnerships provide quarterly estimates, and tracking these helps you anticipate year-end adjustments and plan for any tax distributions needed. Second, don't overlook the importance of understanding your partnership's distribution policy. Some partnerships distribute based on current year income, while others may distribute prior year earnings or even return capital. Understanding this policy helps you predict cash flow and avoid basis surprises. Finally, for QBO users, I suggest creating a dedicated class or location code for all partnership-related transactions. This makes it much easier to pull reports showing all activity related to your LLC investments when it's time to prepare your 1120S or when your CPA needs supporting documentation. One last note - if your S-Corp has significant partnership investments, consider whether quarterly estimated tax payments are necessary. The timing differences between K-1 income and distributions can create cash flow challenges when personal tax bills come due, especially if the partnership retains most of its earnings.

Based on my experience with similar S-Corp/partnership structures, here's a systematic approach that's worked well for me: For your specific example ($45K K-1 income vs $35K distributions), the journal entry in QBO would be: Debit: Investment in LLC Partnership $45,000 Credit: Partnership Income $45,000 Then separately record the distribution: Debit: Cash $35,000 Credit: Investment in LLC Partnership $35,000 This leaves you with a $10,000 increase in your investment account representing undistributed earnings, and $45,000 of income flowing to your 1120S regardless of the cash received. One critical point - make sure you're tracking your tax basis separately from your book basis, especially if the partnership has debt that affects your basis calculation. The K-1 should show your share of partnership liabilities which increases your basis for tax purposes but doesn't necessarily affect your QBO investment account. Also, consider setting up a monthly accrual entry if you can reasonably estimate quarterly income. This smooths out the cash flow impact and helps with interim financial reporting. Many partnerships provide monthly or quarterly income estimates that make this feasible. The key is consistency - pick a method for handling the timing differences and stick with it throughout the year. Your 1120S will always report the full K-1 income regardless of distributions, so focus on making sure your investment account properly tracks your economic interest in the partnership.