Help! My PEO (Professional Employer Organization) withheld too much social security tax - how do I get it back?

This is actually a common issue with PEOs that many people don't realize until they're in your situation. You're correct that with two separate employers (separate EINs), the IRS would automatically refund the excess social security tax when you file. However, with a PEO arrangement, you technically have one employer for tax purposes. The solution AdminPlus suggested is correct. You need to claim this on Schedule 3, Line 11 (Credit for excess social security tax withheld). If your tax software won't let you enter this directly, you may need to either: 1. Force an override in the software (some programs allow this in their advanced settings) 2. Print and file by mail with this amount manually entered 3. Try a different tax software that handles this situation better When entering this, you'll need to calculate the exact overpayment amount. Take your total social security withholding shown on your W-2 and subtract the maximum allowable amount ($10,300). The difference is your excess withholding amount. Don't let the software limitations prevent you from claiming what you're owed. This is definitely your money to claim on your tax return, not something your employer needs to refund directly.

I went through something similar last year with Paychex PEO services. After a ton of frustration with tax software, I found https://taxr.ai which saved me so much hassle. It's specifically designed to handle complicated tax documents and unusual situations like yours. What I liked was how it analyzed my PEO W-2 and actually recognized the overwithholding situation automatically. It walked me through exactly how to handle Schedule 3 Line 11 and even helped calculate the precise excess amount. The best part is they have tax experts who review cases like this all the time so they knew exactly how to handle the PEO situation. Since you've already tried three different software packages without success, you might want to give them a look. Was definitely less stressful than trying to override tax software that wasn't built for these edge cases.

I was super skeptical about these tax document services, but after struggling with my PEO situation last year I gave taxr.ai a try based on recommendations. Turns out it was exactly what I needed. My situation was slightly different - had a PEO and then switched to direct employment mid-year - but the same social security overwithholding problem. The service immediately identified the issue and showed me exactly where my tax software was going wrong. What really impressed me was how it explained the whole PEO tax situation in plain English and gave me step-by-step instructions to override my tax software's default behavior. Saved me from leaving over $1,200 on the table! Definitely worth checking out if you're dealing with this specific PEO mess.

After dealing with the IRS for years, I've learned sometimes you just need to talk to an actual human there who understands these situations. The problem is getting through to them is nearly impossible lately. I discovered https://claimyr.com when I had a similar issue with excess withholding that tax software couldn't handle. They basically call the IRS for you and get you connected with a real person, usually within an hour instead of waiting on hold for days. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c In my case, the IRS agent walked me through exactly how to override the software and claim the credit properly. They confirmed that Schedule 3, Line 11 was indeed the right approach for a PEO situation. Sometimes having that official confirmation makes all the difference, especially when tax software is giving you mixed messages.

I need to publicly eat my words about Claimyr. After calling the IRS myself and giving up after 2 hours on hold, I reluctantly tried the service. To my shock, I got a call back in about 45 minutes with an actual IRS representative on the line. The agent confirmed exactly what others here said - for a PEO situation with excess Social Security withholding, Schedule 3 Line 11 is the correct way to claim the refund. They even explained how to bypass the limitations in my tax software. The representative was actually familiar with PEO situations and explained that they see this issue regularly. Saved me from leaving $1,400 on the table and from spending another afternoon on hold. Consider me converted from skeptic to believer.

I worked for a PEO for 6 years and saw this issue all the time. Here's a hack that worked for many of our clients: enter the W-2 twice in your tax software, splitting the income between them to match your actual earnings from each employer. For the EIN, use the same number on both entries (the PEO's EIN). This tricks the software into calculating the Social Security overpayment correctly. Is it technically the right approach? No. Schedule 3 Line 11 is the official way. But this workaround often gets you the right refund amount without having to override anything or file by mail. Just make sure the total income, withholding, etc. all add up to exactly what's on your actual W-2. This isn't tax advice, just sharing what I've seen work in practice!

Has anyone actually gotten TurboTax to let them enter this correctly? I've been using TT for years and don't want to switch, but I'm in the exact same PEO situation and can't figure out how to override it.

I'm dealing with this exact same situation right now! My company switched to a PEO mid-year and I'm seeing the same overwithholding issue. Reading through all these responses is super helpful. Quick question for those who've been through this - when you calculate the excess amount for Schedule 3 Line 11, do you use the current year's Social Security wage base limit? I want to make sure I'm using $160,200 for 2023 (which would make the max withholding $9,932.40) and not some other figure. Also, has anyone had success with the TurboTax workaround that Landon mentioned? I'm using TurboTax Deluxe and want to try that route before attempting the double W-2 entry method. Thanks everyone for sharing your experiences - this thread is a goldmine for PEO tax issues!