Here are three ways to recoup excess payments:
1. Claim a tax credit. You may have overpaid Social Security tax if you worked for more than one employer last year. Claim the credit on Line 67 of 2007 Form 1040.
2. Obtain a refund. If you discover your company overwithheld tax, you can’t take a credit on Form 1040. Instead, seek an adjustment from your company. For instance, if you overpaid $500 in Social Security tax, the $500 excess may be included in your next paycheck.
3. Offset self-employment tax. If you operated a sideline business, the Social Security tax withheld on wages from your regular job can reduce your self-employment tax bill.
Example: You earned $100,000 from your regular job and $30,000 from your sideline business. Because your wages exceeded the 2007 Social Security wage base of $97,500, you only owe the Medicare portion of self-employment tax or $870 (2.9% of $30,000).
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