Excess Social Security Tax

Everybody has different life style. One people think working hard is important. Other people think life/work balance is important. Also one just works only one job and others work several jobs. I have daytime and nitetime & weekend job. Life/work balance is very important for me. But I don't want to be bored and also try to be active. Open my mind. Be positive. Challenge new things as much as I can. Everyday I am really busy but I am so happy for my life style right now.

Why am I talking about that? I want to mention about Excess Social Security Tax. If you see W-2 form or paycheck, you can see how much your employer withholds Social Security Tax. Usually it's 6.2% of our wages and tips. But, did you know they have a limit? In 2005, the wages and earnings base is $90,000. Employer is required to withhold 6.2% of employee's wages up to $90,000. In other word, maximum social security tax is $5,580 ($90,000 x 6.2%) in 2005. You don't need to pay more than that. Wait... I can hear people's voice. How can we get that much wages?? You never know. Even if you don't get that much wage from one job, you might get that much wages from 2 jobs. Our life is all depend on what we did and what we will do. Also even if you didn't get right now, you might get it in future. So don't immediately think I don't need this tip.

If you do one job and get wages more than $90,000, the payroll system might stop collecting social security tax more than $5,580. But, if you do 2 jobs, companies didn't communicate each other. They don't know how much other company collect Social Security Tax for you. So if you get wages more than $90,000 from 2 jobs, they might collect social security tax too much. If this case happens, what do we need to do?

In such a case, the Excess Social Security Tax payment may claim on line 67, Form 1040. Remember this credit is available on Form 1040 only; Forms 1040EZ and 1040A don't have a place to enter it.

Form 1040 click here.

OK. I mentioned before we are human, not machine. We all make mistake. So do employer. If one employer mistakenly withholds too much social security tax, the taxpayer cannot claim the overpayment on his/her tax return. Rather, he/she must recover the excess withholding from the employer who made the error.

Summary

* The Maximum Social Security Tax is $5,580 ($90,000 x 6.2%) in 2005.
* The Excess Social Security Tax payment may claim on line 67, Form 1040 if you have 2 or more employers during year.
* If one employer mistakenly withholds too much social security tax, we must recover the excess withholding from the employer who made the error.