Getting a Refund on Social Security

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Last year I had two jobs and paid too much in Social Security. How can I get the extra contribution back?

It sounds like you are, indeed, entitled to a refund. In 2001, the maximum employee contribution for Social Security taxes was 6.2% of the first $80,400 of income -; which comes to a grand total of $4,985. (Employers contribute an additional 6.2%, making the full contribution per employee 12.4%.) So assuming you're talking about tax-year 2001, you should have a credit of at least $1,015 coming your way.

Paying too much in Social Security is a fairly common tax snafu. As you've discovered, folks run into this problem when they switch from one well-paying job to another or when they hold two jobs simultaneously. That's because employers are required to withhold Social Security taxes regardless of the taxes the employee has had withheld elsewhere, says CPA Ron Hegt of New York-based Hays & Co.

Fortunately, getting that money back is pretty easy -; especially if you haven't filed your 2001 taxes yet. To receive your refund, just enter the amount that you've paid beyond $4,985 on Line 62 of Form 1040. Now, it sounds as if you know exactly how much you've overcontributed, but if for some reason you're unsure, your W-2s should provide that information. Keep in mind that if you're married and filing jointly, you and your spouse must figure out the credit based on your separate incomes. Also, if you have self-employment income, don't forget that you're expected to pay the full 12.4% on that income, since the IRS views you as both employer and employee. If you haven't already paid the full amount for that income, it could eat into your credit.

What if you've already filed your 2001 taxes, or think you've overpaid in the past three years? You'll have to file an amended return -; IRS Form 1040X -; for each year of overpayment. You should include the excess contribution on line 11. Remember: The statute of limitations on amended returns is three years. Any excess Social Security taxes paid before then can't be recouped.