In the U.S., all workers are required to pay FICA - a tax that funds Social Security and Medicare. For the Social Security portion, this tax is applicable on the first $147,000 of their income (as of 2022). Additionally, railroad employers are required to withhold Tier 1 Railroad Retirement Tax Act (RRTA) tax and Tier 2 RRTA tax.
Since the majority of modern-day employers use automated payroll software, the withholding of Social Security and RRTA taxes will automatically cease once your gross earnings reach the applicable threshold for the year. However, mistakes happen and sometimes the withholding of this tax may still continue. This can be especially true if you worked for two or more employers who are unaware of how much Social Security tax has already been collected for the year.
How Do I Get a Refund for Excess Social Security Tax Withheld?
There are two ways to get your excess Social Security taxes back.
If you worked for one employer, then you should not try to claim the excess tax payment as a credit against your income tax. Instead, notify your employer and request that they adjust the excess amount for you. If they don't, use Form 843, Claim for Refund and Request for Abatement to claim a refund.
If you worked for two or more employers, then you can claim the excess as a credit against your income tax on your return. For more information, refer to “Excess Social Security and Tier 1 RRTA Tax Withheld” in the Instructions for Form 1040 (and Form 1040-SR).
If you are entitled to an excess withholding refund, then Column Tax will automatically add this amount to your federal income tax refund. If you owe any taxes, then the excess withholding will be subtracted from this amount.