Your employer must deduct Social Security tax from your wages, up to the yearly amount required by federal law. If you changed jobs and your wages from all your employers exceeded the annual wage limit for Social Security tax, you probably paid too much tax. This may happen if your last employer was unaware of how much your previous employer withheld from your paychecks. To recover the excess amount, use the method that applies to your situation. Show
Minimum Excess AmountAccording to the IRS, the Social Security tax rate for employees in 2021 is 6.2 percent, up to $142,800 for the year. Therefore, your excess deductions in 2021 should not be less than $8,853.60, which is $142,800 multiplied by 0.062. An exception to this situation would be if your employer deducted Social Security tax from your wages at more than 6.2 percent. In this case, you would overpay Social Security tax regardless of your total earnings for the year. This situation is generally uncommon because many employers use payroll software to calculate paycheck taxes. Accounting for Multiple EmployersYou can claim a credit against your income tax on your federal tax return if the overpayment happened because you had multiple employers. The excess amount would go on the appropriate line of IRS Form 1040. For example, on 2021’s Form 1040, this information goes on line 11 of Schedule 3. To determine the excess amount, add the total Social Security tax withheld from your wages by each of your employers and then deduct the required limit for the year, which Intuit TurboTax reports is $8,853.60 for 2021. Just One EmployerIf the same employer deducted too much Social Security tax, contact them and ask them to fix the issue. They should refund you the overpayment and adjust your W-2 form so it reflects the correct amount of Social Security wages and tax for the year. If your employer doesn't honor your request, you can claim a refund from the Internal Revenue Service by completing Form 843, attaching your W-2 and mailing the documents to the agency. In this case, don't put the excess amount on your 1040 when completing your tax return. Since you already applied for a credit on Form 843, putting the excess amount on your 1040 could result in penalties and interest. Joint Tax ReturnIf you're married and filing a joint return, similar rules apply to claiming excess deductions when there are one or multiple employers. However, when figuring the amount to be refunded on Form 843, don't add your Social Security tax payments to your spouse’s. One or both of you must have individually paid more than the required amount to have excess deductions. To figure whether either of you has excess deductions, calculate what you each paid separately. Tier 1 Railroad Retirement TaxRailroad employees pay Tier I railroad retirement tax instead of Social Security tax. As of 2021, these two taxes have the same tax rates and annual wage limits. The procedures for claiming excess deductions are also similar.
If you are working, there is a limit on the amount of your earnings that is taxed by Social Security. This amount is known as the “maximum taxable earnings” and changes each year. The maximum earnings that are taxed have changed over
the years as shown in the chart below. If you earned more than the maximum in any year, whether in one job or more than one, we only use the maximum to calculate your benefits. When you have more than one job in a year, each of your employers must withhold Social Security taxes from your wages. This applies no matter what the other employers may have withheld. You may then end up with total Social Security taxes withheld that exceed the maximum. When you file your tax return the following
year, you can claim a refund from the IRS for Social Security taxes withheld that exceeded the maximum amount. Maximum Taxable Earnings Each Year
Posted August 2019 If you are switching jobs or working two jobs as an employee and your total wages for the calendar year will exceed the social security wage base ($132,900 in 2019), you may be overpaying social security tax. Unfortunately, you cannot stop the withholding. However, you will get a credit on your next tax return for any excess withheld. Each employer is obligated to withhold social security taxes from your wages. The total they both can withhold may exceed the maximum amount of tax that can be imposed for the year. This amount is $8,239.80 with a 6.20% rate in effect for 2019 and based on the $132,900 wage. If your total withholding is more than that amount, you can recover the excess by claiming a credit for a payment of taxes on your individual tax return for the year. Example: E is an employee of ABC, Inc. from January through April 2019, and earns $70,000 during that period. From May through the end of the year, E works for XYZ, Inc. and earns $65,000. ABC withholds $4,340 in social security taxes ($70,000 × 6.20%), and XYZ withholds $4,030 ($65,000 × 6.20%), for a total $8,370 withheld. This withholding is $130.20 more than the $8,239.80 maximum amount for 2019. On E’s 2019 individual tax return, E will be entitled to claim a credit for a payment of taxes of $130.20. Although you can recover the excess amount withheld when you file your tax return for the year, as described above, you will not get the benefit of the credit until you file the return that is due in April of the following year. IRS is not required to pay you interest on this amount, so in effect you will have made an interest-free loan to the IRS. If you are separately making estimated tax payments for the year, you may be able to avoid this loss by reducing your estimated payments to reflect the over-withholding. Essentially, you may be able to turn the over-withholding into an estimated payment. Note that every employer must also withhold a Medicare tax of 1.45% on all wages. Since there is no ceiling on this tax, as there is for the social security tax, you are not entitled to any refund from the amounts your employers withhold. Please contact us if you would like to discuss this topic further or if you need assistance in working out a revised estimated tax payment schedule due to excess social security tax withholding. How do I know if I had excess Social Security tax withheld?Excess social security withholding occurs when Box 4 is more than 6.2% of Box 3 on your Form W-2 Wage and Tax Statement.
What does Excess Social Security and Tier 1 Rrta tax withheld mean?Excess social security and Tier 1 RRTA tax withheld means that you overpaid on the amount of Social Security from your paychecks. This usually occurs when you change jobs or work multiple jobs.
Can I get a refund for excess Social Security tax withheld?Your employer should adjust the excess for you. If the employer doesn't adjust the overcollection, you can use Form 843, Claim for Refund and Request for Abatement to claim a refund.
What happens to excess Social Security tax withheld?You don't need to take any action. We'll automatically add the excess to your federal refund or subtract it from federal taxes you owe, whichever applies. The excess will appear as a tax credit on Line 11 of your Form 1040, Schedule 3.
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Excess social security tax withheld married filing jointly
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