Do I Get a Refund on Social Security Taxes That Are Withheld?

You may claim a refund of Social Security tax you overpaid.

You may claim a refund of Social Security tax you overpaid.

That mysterious "FICA" on your paycheck, which appears above a deduction of 4.2 percent of your gross income, is proof your employer is following the Federal Insurance Contributions Act. The money helps fund Social Security benefits for retirees and the disabled. It means you've done your part to contribute to Social Security, but you may have paid too much -- and may be entitled to a refund.

Non-Refundable Withholding

The IRS normally refunds overpaid income taxes. It depends on your total withholding for the year, your taxable income, your deductions and exemptions, and your tax rate. You don't declare Social Security taxes, however, and unless you earn above a certain amount, you can't request a waiver or reduction. Payroll withholding is the same no matter how many exemptions you claim. Social Security tax payments are not deductible, and they don't affect your income tax obligation.

Exempt Workers

You may claim a Social Security refund if your employer has made an error and you are exempt from withholding. Workers exempt from withholding include college students employed by their college, employees of foreign governments, foreign students and members of some religious sects such as the Amish. You must apply for an exemption with IRS Form 4029; you can't claim an exemption if you've ever accepted Social Security benefits.

Wage Base Limit

Social Security taxes come out of the first $110,100 of income as of 2012. Your employer is supposed to stop the withholding when your pay for the year hits that level. If the employer didn't do that, you can ask the IRS for a tax credit. This situation sometimes arises when a worker changes jobs. The second employer may not know how much in Social Security taxes the first one took out, and overtax the worker.

Exempt Compensation

Some types of compensation are not subject to Social Security taxes. These include disability benefits, reimbursed expenses and tips of less than $20 a month. It also covers "pre-tax" contributions your employer makes, or you contribute, to a health or retirement savings plan. You can ask for that refund if the employer did take Social Security taxes out for any of these exceptions.


About the Author

Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.

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