Social Security taxes are withheld from the paychecks of all employees working in the United States up to the allowable maximums. Social Security tax is based on a flat percentage of salary and does not allow for deductions from your income like the income tax system, so a Social Security tax refund due to overpayment is rare. However, in some cases, a worker may pay too much in Social Security taxes and may be able to claim a credit for this overpayment and potentially receive a refund.
Depending on whether or not you work for just one employer or several, your withheld Social Security taxes should be refunded either directly or with a tax credit.
Social Security Tax Structure
The Social Security tax is based on a percentage of your salary. At the time of publication, you pay 6.2 percent of your income from employment in Social Security taxes. Social Security tax is part of FICA tax, which stands for the Federal Insurance Contributions Act and includes both. You pay this percentage on your income up to an annual limit, which can change from year to year.
The IRS is responsible for collecting Social Security taxes. Your employer pays an additional 6.2 percent of your salary in Social Security taxes. If you are self-employed, you are responsible for both the employee and employer portion of the tax.
Social Security and Multiple Employers
If you work for more than one employer you could potentially have too much Social Security tax withheld from your paycheck. Each employer must withhold the prescribed amount without respect to any other job you have. If you earned $120,000 per year in one job, that employer has already withheld the maximum amount in tax from you. If you work for another employer and earned $50,000, the second employer has withheld $2,100 too much, and you will need to claim a credit on your tax return.
Claiming Social Security Overpayment Credit
Form 1040, line 71 is where you can claim a credit for your overpayment. Add up the amounts from each of your Form W-2s for Social Security taxes withheld, and subtract the maximum Social Security tax possibly owed for that year, as specified in the Form 1040 instructions, from that amount. The remaining amount is what you overpaid and is the amount of the Social Security tax credit you receive.
Social Security Liability and Credits
The Social Security tax credit is much like the amount of payroll taxes your employer withheld; it is a credit toward your potential tax liability. If your total tax credits are more than your tax liability, you will receive a refund. If your tax liability is higher than what your credits, you will need to pay the difference, even if you have a Social Security tax credit.
Social Security Tax for Non-Citizens
If you are not a U.S. citizen but worked in the United States, you had Social Security taxes withheld from your paycheck. Even if you are not eligible for benefits, you cannot request a refund of these taxes. However, you may be eligible for some Social Security benefits due to international agreements between the United States and other countries.
If you work for one employer and it withholds an incorrect amount of Social Security taxes, you need to ask your employer to correct its error and refund the overpayment. You generally cannot claim the overpayment on your income tax return and receive a Social Security tax refund from the IRS.
Figures for Tax Year 2019
For tax year 2019, employees pay 6.2 percent of earnings up to $132,900 in Social Security, for a maximum of $8,239.80. If you have more than that amount withheld from your paychecks, you are due a tax credit or refund from your employer.
Figures for Tax Year 2018
As of tax year 2018, employees pay 6.2 percent of their earnings to Social Security up to $128,400, meaning a maximum payment of $7,960.80, an increase from prior tax years. If you have more than that amount withheld from your paychecks, you are due a tax credit or refund from your employer.
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- Internal Revenue Service: Form 1040 -- US Individual Income Tax Return
- Investopedia: FICA
- IRS: Topic Number: 751 - Social Security and Medicare Withholding Rates
- IRS: Self-Employment Tax (Social Security and Medicare Taxes)
- IRS: Topic Number 608 - Excess Social Security and RRTA Tax Withheld
- IRS: Form 1040 Instructions
- IRS: Tax Withholding and Estimated Tax
- Thomson Reuters: Social Security Wage Base Increases to $132,900 for 2019