IRS wants $1100 more for 2004 taxes and I don't know why

[KC in KS]

Given that I hold an accounting degree, you'd think I'd be able to figure out a simple IRS notice, right? NOOOO!

Get this. They claim DH's and my (same) employer reported $6500 in Social Security withholding for 2004. Looking at our W2s, I think that's correct.

They also say I didn't report that amount. OOOOKKK, funny, I don't remember anything about SS *withholding* being taxable income. I certainly don't see a spot for it on the 1040.

IRS says this does not result in a increase to our 2004 tax, but that the amount reported does not match the amount they received, so we owe them another $1100.

WTF?

I can only think that the amt. our employer sent isn't matching the amt. received. Why this is our problem, I'm not sure....

Thank God we just got ourselves our first-ever CPA (moved next door to him, and he volunteered for file for us this year!). I'm going to give it a couple of days, so he gets past the filing deadline rush, and ask him to take a look.

Color me confused. Anybody have any other thoughts or theories?

KC

[rabbithorns]

I don't think soc sec is included in salary and wages which is the amount you report and is on your W2 in its own box. But is it taxed differently if you are a contractual worker or self-employed or a consultant?

Do you fit any of those categories? Or are you an actual employee?
That's just a guess on my part. I can't imagine otherwise why they would want to tax income taken out as soc sec...:

[KC in KS]

Regular employee as far as the IRS is concerned.

I *think* there's a screwup between IRS and my company. Somebody keypunched something wrong. But I'm also afraid we're going to be on the hook for the money until it gets straightened out.

Sounds kinda sick, but I'm hoping the same thing has happened to thousands of our other employees in the U.S. Strength of numbers is going to be the best lever to get it straightened out quickly.

[rabbithorns]

I think you can ask for an extension, but I believe if they find you in the wrong, you'll be required to pay interest on that money. If they find you are right, I don't think you get much for your trouble but if they owe you, I think they pay you interest.

BTW, interest paid to you by the IRS is considered taxable income the next year and they will send you an interest statement so you have to claim it! I know because they once lost my return, found it, and ended up paying me $17 in interest. The next year when I added that in, it changed my taxes so much, I lost $300 of EIC!