Staff Resources

FICA Refund FAQs (10.9.19)

FICA Refund checks will be included in your pay of October 25, 2019. Former employees will receive checks sent to their address on record. For more information regarding the FICA refund, please see below.

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? Any individual that was eligible for the refund would have received a letter and consent form in December 2018. Consent forms were due to the Business Office within 45 days of receipt of the letter. If a form was not completed by an eligible employee, the district cannot issue a refund; therefore employees will need to take a credit on their tax return. If this is the case, employees will need to contact their tax advisor.

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

$1,000 $2.00
$5,000 $9.00
$10,000 $18
$15,000 $27
$20,000 $37
$25,000 $46
$30,000 $56
$35,000 $66
$40,000 $74
$45,000 $83
$50,000 $93

 

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.

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.

Please contact the Payroll Department at 586.783.6300, ext. 1212 with any questions.

The content within this section is meant to serve as a resource for LCPS staff members.

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