I am the sole owner and also the sole employee of an S-corp. I live and work in a state with no income tax, so only Federal employment taxes are an issue. The corpoartion is required to make employment tax deposits on a monthly schedule. In January 2009, I somehow miscalculated the amount of social security tax to withold, and witheld about $4 too much (from a ~1600 paycheck). Medicare and Income tax witholding were correct, and the corresponding tax deposit was for twice the actual SS witholding plus twice the actual Medicaid witholding, plus the income tax witholding. I discovered the error while trying to complete the 1st quarter f941, and discovered that total first quarter social security witholding was about $4 too high.
How should I proceed? Should I arrange for the corporation to refund me the excess witholding immediately, do appropriate record keeping, and file the 941 as if the overwitholding never happened [except perhaps (on f941, line 17) to increase the corporation's January tax liability, and decrease itsMarch liability, each by an amount equal to the amount of overwitholding]? Or do I need to file the 941 to reflect the overpayment, and then amend it? In the latter case, how do I get the excess witholding into the corporation's total tax due (on line 8)? Fraction of cents adjustment, even though the amount is clearly too large for any possible rounding error? Does the answer depend on whether the refund occurs before the due date of the corporation's last tax deposit for the quarter [April 15]?