TAX TIPS Paying too Much Social Security Tax by Kevin McCormally
We don't mean "too much" as in more than you'd like to pay. We mean "too much" as in more than you have to pay.
For 2003, the 7.65% bite to pay for social security and medicare applied to the first $87,000 of earnings. After that level, the 6.2% social security tax was supposed to stop while the 1.45% medicare tax continued to hit the rest of your earnings. But if you had more than one job during the year and your combined pay exceeded $87,000, you had too much social security tax withheld from your pay. Fortunately, it's easy to get your money back.
Let's say you switched jobs in mid-2003 and earned $50,000 at each job. Each employer withheld 6.2% of $50,000 ($3,100) for social security. So, you paid a total of $6,200. (That amount should be broken out on your W-2 form as "social security tax withheld.") And, that's too much.
Your employers did nothing wrong. They were each required to withhold the tax on the first $87,000 that they paid you. But, together, they took out more social security tax than any employee is supposed to pay. The maximum any worker was expected to pay in 2003 was $5,394 (6.2% of $87,000).
In this example, you deserve a credit of $806 to recoup the excess tax that was withheld from your paychecks. You don't even have to file an extra form to get your money. To figure your own credit, simply subtract $5,394 from the total amount shown on your W-2s for of social security taxes withheld. And, enter the result on line 64 of your Form 1040.
GETTING STARTED
