For the 2025 U.S. federal tax year, a taxpayer worked for two unrelated employers during the year, and the total Social Security tax withheld across both W-2s exceeds the annual maximum ($10,918.20 for 2025). How does the taxpayer recover the excess withholding?
- The taxpayer claims the excess as a refundable credit on Schedule 3 of Form 1040, since it resulted from having multiple employers each independently withholding up to the wage base
- The taxpayer must contact whichever employer withheld the larger amount and request a corrected W-2 before filing
- The excess is automatically forfeited because Social Security tax withholding is not recoverable once withheld, regardless of the number of employers
- The taxpayer must file Form 843 with the IRS to request a refund of the over-withheld Social Security tax
Why A? And why not the others?
Correct answer: A. The taxpayer claims the excess as a refundable credit on Schedule 3 of Form 1040, since it resulted from having multiple employers each independently withholding up to the wage base
When a taxpayer's combined Social Security tax withholding from two or more unrelated employers exceeds the annual wage-base maximum, the excess is claimed directly as a credit on Schedule 3 of Form 1040, which flows through to increase the refund or reduce the balance due; this situation arises because each employer withholds correctly based only on the wages it paid, with no visibility into wages the employee earned elsewhere. The option requiring the taxpayer to contact the higher-withholding employer for a corrected W-2 is wrong because neither employer made an error — each properly withheld up to the wage base on its own wages — so there is nothing to correct on either W-2. The option claiming the excess is simply forfeited is wrong because the credit mechanism exists precisely to return this type of over-withholding to the taxpayer. The option requiring Form 843 is wrong because that form is used when a single employer mistakenly withholds Social Security tax beyond the wage base on its own payroll, an employer error; the multiple-employer scenario is resolved directly on the tax return without a separate refund-claim form.
Source: IRS Topic no. 608, Excess Social Security and RRTA Tax Withheld; Instructions for Schedule 3 (Form 1040) (2025)