Your earned income, like wages and bonuses, is subject to the federal Social Security tax, which equals 12.4 percent total, though it's actually split with 6.2 percent being paid from the employee’s wages and 6.2 percent being paid by the employer. However, only a certain amount of income, known as the contribution and benefit base, is subject to Social Security tax each year.
The Social Security tax limits are calculated separately for each taxpayer. So if you’re married, you won’t get a refund if your combined income exceeds the contribution and benefit base.
Excess Social Security Tax Withheld
If you work for multiple companies, each company is required to withhold Social Security tax from your paycheck until your earnings from that job exceed the annual contribution and benefit base. As a result, if your total earned income across multiple jobs exceeds the contribution and benefit base, you can pay more than the annual limit.
For example, if the contribution and benefit base is $132,900 and you have two jobs, one that pays $108,400 and one that pays $40,000, your earned income exceeds the contribution and benefit base by $15,500, but each of your employers will withhold Social Security tax from the entire amount.
When you file your taxes, first calculate the amount of your overpayment of Social Security tax by adding up the combined Social Security tax withheld from all your wages. You can find the amount withheld on your Form W-2 for each job. Then, subtract the annual maximum Social Security tax from your total withholding to determine the amount of your Social Security tax refund and report that amount as a tax credit on your tax return.
Request Refund From Single Employer
If your Social Security tax overpayment was due to a single employer withholding more than the maximum Social Security tax for the year, don’t claim a refund on your tax return. Instead, you are required to request the refund directly from your employer.
For example, if your employer pays you a $150,000 salary and withholds Social Security taxes on the entire amount, you must first go to your employer and request a refund of the excess withholding. If your employer refuses to refund the excess, file IRS Form 843 (Claim for Refund and Request for Abatement) with your taxes to claim a refund.
Visit IRS.gov/forms and search for this form by name or number. You can also download the instructions for this form, which include letting you know the details of getting a statement from your employer.
2019 Social Security Tax Limits
In 2019, the contribution and benefit base is $132,900 (up from $128,400 in tax year 2018), which means the maximum Social Security tax you should pay from your wages for the year is $8,239.80. This figure represents your 6.2 percent contribution of the total 12.4 percent contribution. (Your employer will also pay an equal amount, $8,239.80, in Social Security tax on your behalf.)
So, if you have $9,000 withheld from your paycheck for Social Security tax, you will be entitled to a $760.20 refund, which represents the excess amount you paid above your $8,239.80 obligation.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."