Excess Social Security

Understanding Excess Social Security: What It Means and How It Affects You

If you’ve had multiple jobs in a year or earned a high income, you may have noticed excess Social Security tax withheld from your paycheck. But what does this mean, and how can you get that money back?

_{What Is Excess Social Security?}

The Social Security tax is capped each year, meaning you only owe taxes on earnings up to a certain limit. In 2024, for example, that limit is $168,600. Employers are required to withhold 6.2% of your wages for Social Security, but if you’ve worked for multiple employers, they may collectively withhold more than the maximum required amount.

_{How to Get a Refund}

If you’ve overpaid due to multiple employers withholding beyond the cap, you can claim a credit for the excess amount on your tax return. This is done when you file Form 1040, where the overpaid Social Security tax is refunded as part of your overall tax return.  Be sure to inform your CPA of the excess so you do not miss out on the credit.

_{What If You’re Self-Employed?}

Self-employed individuals pay both the employer and employee portion of Social Security taxes. However, they can claim a deduction for the employer’s share when filing taxes, reducing their overall tax liability.

_{Final Thoughts}

Excess Social Security tax withholding is common among high earners and those with multiple jobs, but the IRS provides an easy way to get a refund. Always review your pay stubs and tax documents to ensure you’re not leaving money on the table!