Do You Get OASDI Back on Your Tax Return?

OASDI (Old-Age, Survivors, and Disability Insurance) taxes are automatically withheld from most employees’ paychecks to fund Social Security benefits. While these contributions are mandatory, certain situations can lead to an overpayment, raising the question of whether you can get that money back when filing your tax return.

Reasons a Refund Might Occur

Overpayments of OASDI tax often result from payroll errors or tax rules affecting withholding amounts. Here are the most common reasons this happens.

Multiple Employer Withholdings

If you worked for multiple employers in a single tax year, each withheld OASDI tax separately without considering what had already been deducted. The OASDI tax rate is 6.2% on wages up to an annual limit set by the Social Security Administration. In 2024, this cap is $168,600. Once earnings exceed this amount, no further OASDI tax should be withheld.

If your combined income from multiple jobs surpassed this threshold, excess tax may have been deducted. For example, if you earned $100,000 from one employer and $80,000 from another, each would have withheld 6.2% on the full amount. This means you would have paid OASDI taxes on $180,000 instead of the $168,600 limit, resulting in an overpayment. You can claim the excess amount as a credit when filing your federal tax return.

Nonresident Alien Status

Certain nonresident aliens are exempt from OASDI tax under U.S. tax treaties or visa classifications. Those on specific nonimmigrant visas, such as F-1 (students), J-1 (exchange visitors), M-1 (vocational students), or Q-1 (cultural exchange participants), are generally not required to contribute to Social Security taxes while performing authorized work in the U.S.

For example, a foreign student working on campus under an F-1 visa should not have Social Security taxes deducted. If an employer withholds OASDI tax in error, the student must first request reimbursement from the employer. If the employer does not correct the issue, the student can submit a claim to the IRS with supporting documentation.

Employer Errors

Payroll mistakes can also lead to excessive OASDI tax deductions. Employers may mistakenly withhold OASDI tax from earnings that should not be subject to it, such as deferred compensation, pre-tax deductions, or wages exceeding the taxable limit.

For example, an employer might incorrectly apply OASDI tax to contributions made to a qualified retirement plan, which should not be included in taxable wages for Social Security purposes. Similarly, reimbursements for business expenses under an accountable plan should not be taxed, but payroll software errors can result in incorrect deductions.

Employees should review their W-2 form, particularly Box 3, to verify Social Security wages. If an error is found, contacting the employer for correction is the first step. If the employer does not resolve the issue, a refund can be sought from the IRS.

How to Request a Refund

The process for requesting a refund depends on the reason for the overpayment and whether the employer can correct it. Reviewing your W-2 form, especially Box 4 (total Social Security tax withheld), is the first step.

For excess withholdings due to multiple employers, the IRS allows individuals to claim the overpaid amount as a credit on their federal tax return by completing Schedule 3 (Form 1040). This adjustment reduces tax liability or increases the refund amount. Since this is handled through the tax return, no additional forms or employer intervention are required.

If the overpayment resulted from an employer miscalculation, contact the payroll or human resources department. Employers can correct errors by issuing a corrected W-2 (Form W-2c) or refunding the excess amount directly. If the employer does not resolve the issue, employees can file Form 843, Claim for Refund and Request for Abatement, with the IRS. Supporting documents, such as pay stubs and correspondence with the employer, should be included.

Those exempt from OASDI tax who had it withheld in error must also use Form 843 to request a refund. Additional documentation, such as a copy of the visa or other proof of exemption, must be included. The IRS may take several months to process these claims, so submitting all required paperwork accurately helps avoid delays.

Reporting OASDI Adjustments on Returns

When filing a tax return, any OASDI overpayments must be reported correctly to ensure the excess amount is credited or refunded.

For individuals claiming an adjustment due to excess withholdings, the overpaid amount is included on Schedule 3 (Form 1040) under the section for nonrefundable credits. Tax preparation software typically calculates this automatically when multiple W-2s are entered, but those filing manually must ensure the correct figures are transferred from Box 4 of each W-2. Misreporting can lead to IRS verification requests, delaying processing.

If an employer issued a corrected W-2c, the revised Social Security tax amount should be used when filing. This prevents discrepancies between reported wages and withheld Social Security tax. Taxpayers should retain both the original and corrected W-2 forms in case additional verification is needed. If the adjustment was made after filing, an amended return (Form 1040-X) may be required to reconcile the discrepancy.