Is Social Security Tax Refundable?

Social Security taxes make up part of the Federal Insurance Contributions Act, or FICA, taxes. Unless you’ve had Social Security tax erroneously withheld, you won’t receive a refund. If an error has occurred, how you get a refund of the excess Social Security tax withheld depends on the cause of the over-withholding.

Social Security Limits

The Social Security tax only applies to your earned income up to the amount of the wage base for the year. The wage base adjusts annually for inflation. For example, in 2012, the wage base is $110,100 and the Social Security tax rate is 4.2 percent for employees, which means the maximum that you should have withheld from your paychecks for Social Security taxes is $4,624.20.

Potential Errors

The most likely cause of having too much Social Security tax withheld during the year is that you worked for multiple employers. Different employers don’t share your salary information, so each one withholds Social Security taxes up to the annual maximum. For example, if in 2012 you work two jobs that each pay you $100,000, your total income is $200,000 but you only owe Social Security taxes on the first $110,100. However, each employer would withhold taxes on your entire salary, so you’d have way too much withheld. Less likely is a single employer withholding more than is required.

Multiple Employer Excess Withholding

If you have multiple employers and the total withheld exceeds the annual maximum, you can claim a refundable tax credit when you file your taxes. To do so, calculate the excess withheld by subtracting your total Social Security taxes withheld from the annual maximum due. For example, if the maximum you should have paid in Social Security taxes is $4,624.20 but your employers combined to withhold $7,724.20, you had an excess of $3,100 withheld. Report the excess on either line 69 of Form 1040 or line 41 of Form 1040A. If you use Form 1040A, write “Excess SST” next to line 41.

Single Employer Error

If your employer withholds too much, you can’t just claim a credit on your taxes. Instead, you must first go to your employer and ask for a refund of the excess. If your employer won’t give it to you, you must file Form 843, Claim for Refund and Request for Abatement, to request a refund from the government. With the form, indicate that you are seeking a refund for employment taxes on line 3 and include a statement from your employer indicating the amount of over-collection. If your employer won't provide one, include your own statement as well as a statement saying the employer will not provide one.

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About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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