Social Security taxes are withheld at a rate of 6.2% from an employee's paycheck; Medicare taxes are likewise withheld at a rate of 1.45%
Normally, a taxpayer who has one W-2 with Social Security wages (box 3 on the W-2) of more than $132,900 will see withholding of only $8,239.80 (6.2% times $132,900) no matter how much more the taxpayer was paid.
However, if there are W-2s from two employers, each paying less than $132,900 but together adding up to more then $132,900, then neither employer will limit the amount (because they don't know to). In this case, the excess Social Security tax withheld is returned to the taxpayer on line 11 on Schedule 3 (1040).
Note that there is no limit on Medicare wages, so that is why this applies only to the Social Security taxes .
[Edited 4/2/2020 4:01 pm CDT - updated for 2019]
