Can I Include Social Security Withheld as a Deduction?

by Tom Streissguth

    When you prepare your annual federal tax return, it's important to remember deductions. These are expenses you can subtract from your gross income. The result of taking deductions (and claiming exemptions) from your gross income is your net taxable income. By claiming all the deductions the law allows, you can lower your tax liability as well as your tax rate in some cases. Some -- but not all -- of the many taxes you pay are deductible.

    The IRS allows you to deduct a wide range of taxes, including property taxes you pay on your house, as well as income taxes to your state or city. Sales taxes are deductible if you don't deduct state income tax, as are vehicle taxes and registration fees under certain circumstances. Federal income tax is not deductible, nor is Social Security tax.

    The Federal Insurance Contributions Act finances Social Security and Medicare by requiring payroll withholding for most salaried workers in the United States. By law, both the employer and the employee pay a portion of this tax that goes into the Social Security trust fund to pay current beneficiaries. Self-employed workers pay both employer and employee portions of the tax, and they are required to make quarterly estimated payments during the year.

    The IRS collects the Social Security payroll tax on behalf of the Social Security Administration. IRS rules do not allow the employer or the employee to waive the tax or change its rate, which as of 2012 was 4.2 percent for employees and 6.2 percent for employers. You may not deduct any payroll tax withheld from your income. Your eligibility for Social Security benefits depends on a system of work credits, which are earned by drawing income and paying in to the Social Security system.

    There is a "wage base limit" of $110,100 on wages or self-employment income subject to Social Security tax. As soon as you reach this amount, your Social Security withholding is supposed to stop for the year.
    However, if you work for more than one employer during the year, you might find that more than $110,100 of your income has been subject to payroll tax for Social Security. If that occurs, you claim the excess as a credit against the income taxes you owe the IRS. You cannot claim the excess as a deduction from income.

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    About the Author

    Tom Streissguth has worked for over 15 years in the legal field as a writer and legal assistant, and has authored numerous articles on Social Security disability law. He has many nonfiction and reference titles in print, including works for The Gale Group and Lerner. He holds a Bachelor of Arts from Yale University.

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