Tax Year Prior to 2020: Employer Withheld too much Social Security tax do I have to file a form 843?

[CBM122020]

My employer withheld $2.39 more than needed for my social security tax.  It's too much trouble to reach out to them to correct or to fill out an 843. 

How can I move forward with filing my taxes without going through the trouble of reaching out to my employer or filling out an 843?

[VictorW9]

So, below are instructions that will walk you through getting back excess Social Security withholding from a 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 $8,239.80 per taxpayer for tax year 2019.

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 8,239.80 (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.

[Edited: 3/22/2020  |   2:33 pm]

[joeman22]

I am a university student, and the university withheld social security and medicaid taxes by mistake in my W2 (as a student, I should have been exempt). I saw that TT does not handle form 843, so I will mail it after I file my return because the university is not able to give me a refund or correct the W2.

Since I file jointly with my wife, the medicaid wages on the W2 Box 5 get added to form 8959. So I have to pay additional medicare tax on these wages, even though I should have been exempt. When I submit form 843 to ask for a refund of the medicare tax shown on the W2 that was withheld in error, can I also ask for a refund of this additional medicare tax that got added into form 8959 (and would not have been factored in had the W2 withholding been done correctly)?

[BillM223]

As for your Social Security tax withheld, you need to go back to the university and ask why these taxes were withheld. Note that this exception does not apply to all students of the university; some people that you might consider to be students don't actually qualify.

Please see "Student Exception to FICA Tax" at the IRS website, and especially read Notice 2005-11.

Note that "FICA" refers to both Social Security and Medicare taxes together.

The university may point out why it believes that they were required to withhold FICA on your pay. Note that since the university as employer is also paying an equal amount of FICA taxes on your behalf, they are actually motivated to agree with you and not do the withholding. The fact that they did the withholding makes me think that you don't meet the exception that allows you to opt of of the FICA withholding.

So, ask for the reason in writing from the university on why they did the withholding. On form 843, you will have to explain why you think that the university was not justified in doing the withholding, so in all fairness, you need to ask them. 

[joeman22]

Thank you for your help! I have asked the university, and due to an administrative issue, half of my W2 wages show up in Boxes 5-6 and were subjected to medicare tax. This was an error though and I should have been fully exempt, but the university said they cannot refund me that tax money for the part that was done in error and cannot issue a corrected W2. They did give me a letter of support that I could use when I file 843, so I am planning to file form 843 to ask for the W2 FICA taxes.

But TT also factors the W2 Box 5 Medicare wages into form 8959 - which should have been $0, but given the error there is this additional medicare tax that gets added due to filing jointly with my wife. Is there a way to ask the IRS for a refund for the difference in the 8959 tax by explaining what happened, that I cannot get an official corrected W2, etc? Or how should I proceed? I was not sure if form 843 can be used for the W2 FICA error and also the error that resulted in the 8959 calculation?

[BillM223]

I don't know what form 8959 has to do with you. The 8959 is used to report "additional Medicare tax" which is Medicare tax on incomes over $250,000 (married filing joint). Is the university paying you that much? (If they are, I want your job)

As for the 843, you are in luck, because the instructions say "A refund to an employee of excess social security, Medicare, or RRTA tax withheld by any one employer, but only if your employer will not adjust the overcollection." See 843 Instructions, page 1.

It is good that the university is co-operating. See the instructions under the subheading "Refund of excess social security, Medicare, or RRTA tax." (page 4)

"If you are claiming a refund of excess social security, Medicare, or RRTA tax withheld by one employer, you must, if possible, attach a statement from the employer. The statement should indicate the following.

• The amount, if any, the employer has repaid or reimbursed you for excess taxes withheld.

• The amount, if any, of credit or refund claimed by the employer or authorized by you to be claimed by the employer. The employer should include in the statement the fact that it is made in support of your claim for refund of employee tax paid by the employer to the IRS."

So read the instructions carefully. Also make clear in your statement the way the SS tax has been treated versus the Medicare (one partially paid back, the other not). Also, be sure to note how much the uni repaid, and add your W-2.

[joeman22]

Thank you for your thorough reply! The 8959 appears to apply in my case because my wife and I are filing jointly, and given our combined incomes, the mistake on the university's W2 medicare wages gets added into our 8959 for additional medicare tax. That's why I was wondering if there is a way to ask the IRS for a refund for this additional 8959 medicare tax as well if I explain the error (and not just filing form 843 to ask for a refund for what is shown on the W2 that was withheld) since the W2 medicare gets fed into the 8959 and there is this extra withholding that results there. I wish the university would just issue a corrected W2 since that would fix the 8959 and avoid the 843, but at least they gave me a letter. Not sure what I can do to address the 8959 portion of the added medicare tax though and ask for a refund on that.

[LeonardS]

Excess social security tax withheld can be claimed as a credit on Form 1040 Schedule 3 line 11. 

Form 8959, is used to report Medicare Tax, subject to the additional 0.9% percent Medicare tax on the portion of wages, self-employment, and railroad retirement income that exceeds $200,000.  It is not used to request a refund.

[nrichey11]

can you explain where to mail the form if your employer withheld too much social security?  on the form instructions, i do not see which category that is and i did not receive a notice.

[kcrook]

Please update your help section to include instructions for tipped workers. Tipped workers need to add box 3 (Social Security Wages) and box 7 (Social Security Tips) to equal their total compensation. Or rather what is in box 1 (Total wages). I've gotten multiple calls from our employees saying we took too much in Social Security tax, when in reality it's your software that doesn't add the correct amount that is then taxed by 6.2%. Your software then informs them that they are owed a refund by the company and need to be issued a corrected W2.  When they call to complain I have to explain to them that their math is incorrect. People do not like being told their math is incorrect.  We have over 40,000 employees. I've had to explain it a lot. Please do something to correct this issue as I'm sure our associates aren't the only ones it impacts. 

Here is an example:

If you take Box 3 + Box 7 = Total wages = box 1

Box 4 = SS Tax is 6.2% of boxes 3 and 7 added or box 1.

Example of a W2:

Box 3 = $11452.99 + Box 7 = $2269.18 =  box 1 = $13722.17

Box 4 = $13722.17 X 6.2% = $850.76

Your amount in Box 4 is $850.76 The correct amount was taken out for Social Security Tax

[AmyC]

@kcrook Your calculations are absolutely correct. You are correct that a w2c is not needed.

The program was having an executive ordering problem with the delay of SE tax being thrown into the program. The program is now fixed. It was not an issue that stopped anyone from filing and was just a warning to check their w2.

How very frustrating for you and I am sorry. Several managers have now assured me things are correct now.

[ejilwan]

I worked for two employers in 2021 and ended up paying $14,221.44 in social security taxes. I understand that the additional withholding ($5,367.84) will be refunded when I file my taxes. Can I also get a refund for the excess withholding paid by the employers on my behalf?

[Opus 17]

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@ejilwan wrote:

I worked for two employers in 2021 and ended up paying $14,221.44 in social security taxes. I understand that the additional withholding ($5,367.84) will be refunded when I file my taxes. Can I also get a refund for the excess withholding paid by the employers on my behalf?

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No. 

[DoninGA]

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@ejilwan wrote:

I worked for two employers in 2021 and ended up paying $14,221.44 in social security taxes. I understand that the additional withholding ($5,367.84) will be refunded when I file my taxes. Can I also get a refund for the excess withholding paid by the employers on my behalf?

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If neither employer withheld the maximum SS taxes of $8,853.60 in 2021 then they are not required to refund you any SS taxes withheld.