In a year when the maximum income for Social Security was ...

In a year when the maximum income for Social Security was $\$ 106,800,$ Bart worked at two jobs. In one job he earned $\$ 99,112 .$ In his second job, he earned $\$ 56,222 .$ Both of his employers took out Social Security tax. As a result, Bart had excess Social Security tax, and the government must return some of it to him. How much does the government owe him for excess Social Security paid?

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Key Concepts

Multiple Employer Income Coordination

When an individual has income from more than one employer, each employer may independently apply the Social Security tax up to the wage base, without coordinating with the other. This can result in overpayment of Social Security tax, making it necessary for the excess to be refunded to the taxpayer.

Excess Social Security Tax

Excess Social Security tax occurs when more Social Security tax is withheld than is necessary, usually because an employee works multiple jobs. Each employer may withhold tax up to the wage base independently, potentially leading to a total withholding that exceeds the maximum tax owed.

Social Security Payroll Tax

The Social Security payroll tax is a percentage of an employee's earnings that is withheld by employers and contributed to Social Security. This tax is applied to wages up to the taxable maximum, and both the employee and employer typically pay this tax.

Social Security Wage Base

The Social Security wage base is the maximum amount of a worker's income that is subject to Social Security tax in a given year. Earnings above this cap are not taxed, ensuring that only income up to the limit contributes to Social Security funding.

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