I have a payroll question about someone who has been paid as an independent contractor (1099) and is now being hired and moved to regular payroll. He already been paid from us more than $102,000 this year (since Jan. 1), and assuming he has been paying his self-employed Social Security taxes, he should have already maxed out his SS payments.

So, I would think, this means we don't have to deduct SS taxes (or pay the employer share) for him. From what I found doing some research, if we would continue to pay his SS, and he already paid his self-employment tax, he would get his payroll deduction back when he filed his taxes, but we wouldn't get our 6.2%.

I can see two problems with not paying the payroll SS.

1)Maybe we're not allowed to take notice of any other income, but each payroll is in its own little world.

2)Maybe he'll aggregate all his income together on his tax return, and max out his SS liability through payroll, and not pay the self-employment SS. However, if he's been paying (filing) quarterly, he should have already maxed out his SS during the first quarter.

So, in the end, can we take notice of the fact that he already has more than $102,000 in (self-employed) wages?

Thank you very much.

No, you must withhold SS taxes on this employee. It doesn't matter if he paid the taxes already himself, or other employers have already withheld the max on him. He can claim a credit when he files his 1040 on line 67.

Hope this helps.