Excess Social Security - Multiple Employer

[Ian_TZ]

Hi,

I have had two jobs in 2021. Between the two employers, there's an excess social security tax withhold.  It doesn't seem that turbotax 2021 automatically add the excess to my refund. Instead, it's advising me that my employer might have made a mistake.  What should I do?

Ian

[Cynthiad66]

@Ian_TZ - Yes, you can get excess Social Security tax refunded.

The procedure depends on whether the excess withholdings were caused by multiple employers exceeding the maximum or too much being withheld by a single employer.  You said multiple employers but one of the employers may have over withheld.  See scenarios below.

Select your situation for more info.

Multiple employers

For tax year 2021, you'll have excess Social Security withholdings if the sum of multiple employers' withholdings exceeds $8,853.60 per taxpayer.

You don't need to take any action. We'll automatically add the excess to your federal refund or subtract it from federal taxes you owe, whichever applies.

The excess will appear as a tax credit on Line 11 of your Form 1040, Schedule 3.

Single employer

Your employer is supposed to withhold 6.2% of your Social Security Wages (the Box 3 amount on your W-2), up to a maximum of $8,853.60 per taxpayer for tax year 2021.

If one employer withheld too much Social Security tax, you won't be able to take a credit for the excess on your tax return.

(TurboTax determines this by looking at your employer's EIN. In unusual cases where the employer changed their EIN during the tax year, an excess withholding credit can be taken as explained in "Multiple employers," above.)

So, if your employer withheld too much, contact them and ask for:

1. A refund for the excess amount, and
2. A corrected W-2 (also called a W-2c) which shows the correct Box 3 and Box 4 amounts.

Do not file with excess withholdings on your return, as you may be subjected to penalties and interest.

What if my employer can't—or won't—cooperate?

You can correct the Box 4 amount yourself before filing. Simply multiply the amount in Box 3 by a factor of 0.062 and enter that amount or 8,853.60 (whichever is less) in Box 4.

To get a refund for the excess withholding, fill out IRS Form 843: Claim for Refund and Request for Abatement according to the Form 843 Instructions and mail it in separately. Make a copy to keep with your tax return paperwork.

[Ian_TZ]

Thank you for your response.  From what I can tell, both employers have withheld 6.2% on social security wage for me, and the total exceeded the Max.  But Turbo tax doesn't seem to be generating a Schedule 3 of 1040 for me automatically. Not sure if it is a software issue or user issue. 

[DianeW777]

This is an automated calculation for TurboTax when there are two or more employers.  If you are married, make sure the W-2s are assigned to the correct spouse (if both have W-2s).  Then double check your Form 1040, line 31 (and Schedule 3, Part II, line 11).

As indicated by our awesome Tax Expert @Cynthiad66 multiple employers have paid the tax to the IRS, so a refund of the excess should be included with your tax return payments.

Please update here if you need further assistance.

[Ian_TZ]

Thank you for your response. But I don't think the calculation happened in TurboTax 2021 Deluxe version. 

I have tried to input the numbers again.  The software seems to indicate whichever employer I input first should provide me with a W-2c form.  Both of my employer in 2021 had withheld 6.2% of my social security wage.

Can you confirm such calculation is built into the software correctly?  Can you advise what is the timing such automatic calculation happens?  

Thanks,

Ian

[gerygutnik]

I also face the same problem. Last year, I could see it Schedule 3, but this year Schedule 3 is not generated in the Deluxe version. When contacting my employers, they say they each did the right thing based on wages, so cannot reimburse or issue W-2c. 

[Ian_TZ]

I figured out a manual way to do it.  

1. Switch to Form mode (as opposed to step-by-step mode)
2. Click on 1040 from the list, go to line 31, and click on the magnifier to go to supporting form. It takes me to 1040/1040SR works.
3. Go to line 31 and click on the magnifier to go to supporting forms. It takes me to Schedule 3.
4. Go to line 11 and click on the magnifier to go to supporting forms. It takes me to 1040/1040SR works.
5. Find box A of Excess social security and RRTA withheld, and enter the excess withhold manual.

[gerygutnik]

@Ian_TZ, on another thread where I asked my question, someone helped me realize that somehow I got same EIN on my two different employers W2 entries. Fixing it, fixed my problem and generated Schedule 3 automatically. I saw that you fixed it manually, and not sure you'd have the same issue, but thought I mention it to you: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-excess-of-ssn-tax-withheld/01...