1

After a generous hour meeting with a CPA gratis, we ran out of time, but I still had a few questions.

I have a full time job and have been doing some contracting work nights and weekends. Full-time gross is $120k USD. Until recently, my contracting work was 1099, grossing around $18k this year.
Since, they have farmed out their contractor payroll to a 3rd party. This 3rd party requires Social Security and Federal Withholdings when they direct deposit my checks.

Due to my FT position, it appears (SSA Link) that I exceed the maximum taxable earnings of $118,500 for SS withholdings. Because of this, a few related questions:

  1. Am/how I able to reclaim this on my next tax return?
  2. Is this something fairly straightforward for a CPA to deal with?
  3. Is there anything I can relay to the 3rd party to compel them to not withhold SS tax?
6

I wrote about the Social Security overlap when switching job a long time ago. Your situation is essentially the same.

Each employer is required to withhold FICA taxes to the full extent, and it doesn't matter for them if you're exceeding the cap with the other employer. The reason, in addition to the FICA wording, is that the employers match your portion with their own portion. The same amount withheld from you is also paid by the employer, so you're only paying half of the total FICA amount.

Your overall Social Security tax is capped. But that cap doesn't affect the employers. So they will continue to pay the full tax, and withhold your half from your salary, and you will claim the excess back on your tax return. Any tax preparation software will handle this situation easily. Just make sure the excess goes to line 71 on your form 1040.


As a side note - when people say "contract work", they usually refer to 1099 contractors, not employees with multiple jobs. 1099 payers are not required to withhold anything, and the contractor pays both halves of the tax as part of the Schedule SE calculations. On that schedule, the cap also comes into play.

5

They have to withhold.

When you file your taxes there is a line item to refund overpayment. Fairly trivial.

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