How to Determine If You Paid Too Much Social Security Tax

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Social security tax should be 15.3 percent of the gross income, and most employers pay half of that percentage while the other half appears on the W-2 at the end of the year. Calculate social security tax, which everyone draws on in old age, with information from an IRS tax agent in this free video on personal finance.

Part of the Video Series: Paying Taxes
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Video Transcript

In this segment we will talk about if you paid too much social security tax. Well you know we all pay too much social security tax but it's one of those taxes that we have to pay because some day we'll all get old enough to draw on it. The way it's calculated is 15.3% of your gross income. That is on your W2. You will see that number and that covers your Medicare and your social security tax. On your W2, the amount on the second box to the right for your FICA shows that you have paid half of that 15.3% they took it right out of your paycheck and your employer paid the other half and he paid that directly to the Internal Revenue Service. When you're self-employed however, no one is paying that for you and you must pay your own 15.3% of your net income. That's done with an SE form and it's put right on your schedule C. Now this is separate from the actual income tax, it's a separate number. Thank you very much.

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