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Did you pay too much Social Security tax in 2007? We don't mean more than you'd like to pay. We mean more than you have to pay.
For 2007, the 7.65% bite to pay for Social Security and Medicare applied to the first $97,500 of earnings. After that level, the 6.2% Social Security tax was supposed to stop while the 1.45% Medicare tax continued to hit the rest of your earnings. But if you had more than one job during the year and your combined pay exceeded $97,500, too much Social Security tax was withheld from your pay. Fortunately, it's easy to get your money back.
Let's say you switched jobs in mid-2007 and earned $50,000 at each job. Each employer withheld 6.2% of $50,000 ($3,100) for Social Security. So, you paid a total of $6,200. (Those amounts should be broken out on your W-2 forms as "Social Security tax withheld.") And, that's too much.
Your employers did nothing wrong. They each were required to withhold the tax on every dollar they paid you because you earned less than $97,500 from each one. But, together, they took out more Social Security tax than any employee is supposed to pay. The maximum any worker was expected to pay in 2007 was $6,045 (6.2% of $97,500).
In this example, you deserve a credit of $155 to recoup the excess tax that was withheld from your paychecks. You don't even have to file an extra form to get your money. To figure your own credit, simply subtract $6,045 from the total amount shown on your W-2s for Social Security taxes withheld. And, enter the result on line 67 of your Form 1040.
