FICA Refund FAQs (10.29.18)
What is ORS PA 300 FICA Refund?
On September 4, 2012, the Michigan Legislature enacted Public Act 300. PA 300 required all actively employed members of the Michigan Public School Employees Retirement System (MPSERS) to make certain elections regarding their pensions and retiree benefits. For health benefits, members could choose between contributing 3% of their gross payroll in order to receive subsidized health care and opening a personal health care fund (457 plan) with a 2% employer match into a 401k. The Internal Revenue Service (IRS) later ruled that the 3% healthcare contribution qualified as a Section 125 plan, deeming it exempt from FICA taxes. Before this ruling, many school districts, including L’Anse Creuse, withheld FICA taxes from the 3% healthcare contributions. Affected employees are thus eligible for a FICA refund from the IRS.
Who is eligible for a FICA refund?
Anyone who received a paycheck from L’Anse Creuse Public Schools between September 7, 2012 and February 8, 2013, and paid FICA on the 3% healthcare deducted from those paychecks.
What must I do to receive my refund?
The district will send each eligible individual (via mail or e-mail) an Employee Consent Form. In order to receive your FICA refund, you must complete the consent form and return it to the district within 45 days of receipt.
Who will calculate the refund amounts?
The district will calculate the FICA refund amount based on your payroll history. In general, your FICA refund is the sum of 5.65% of your 3% healthcare deduction from September 7, 2012 to December 31, 2012 and 7.65% of your 3% healthcare deduction from January 1, 2013 to February 8, 2013. Please note in the September to December 2012 the Obama Administration implemented tax payer relief efforts and as result the FICA rate was lower during that time period. Your refund will differ if you reached the Social Security wage limit in either 2012 ($110,100) or 2013 ($113,700).
How much money will be refunded to me?
Your refund amount will depend on the total of your 3% healthcare deduction from September 7, 2012 to February 8, 2013. For illustrative purposes only, see the chart below for an estimate of your FICA refund:
Wages from 9/7/2012 to 2/8/2013
Estimated FICA Refund
When will I receive my refund?
The district cannot issue your FICA refund until we receive the funds from the IRS. This process is expected to take seven to nine months after we receive consent from our employees. The district will keep you informed as developments occur.
Will I receive interest on the FICA refund?
Yes. The interest amount will be determined by the IRS.
Will the refund be considered additional income that will cause my pension to be re-calculated?
No; your FICA refund is not reportable to the Office of Retirement Services (ORS) as earnings.
If I consent to a FICA refund, will I need to file an amended tax return for 2012 and 2013?
No, you will not need to file an amended tax return for tax years 2012 and 2013. However, you will receive a corrected W-2 (form W-2C) for both years. The W-2C is for your informational purposes only. The district is required to file forms W-2C in order to update your wage records with the Social Security Administration.
If I am currently collecting Social Security, will consenting to the FICA refund cause my Social Security payment to decrease?
Potentially. If you consent to the FICA refund, your Social Security wages for 2012 and 2013 will be reduced. Depending on your circumstances, this may cause your Social Security payment to decrease. You may want to consult with your tax preparer or financial advisor for guidance.
The content within this section is meant to serve as a resource for LCPS staff members.
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