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Income Tax Credit When More Than Maximum Payroll Taxes Deducted
(Posted August 31, 2003)
Question 305: I work for the railroad and will be taking a part-time job that will take out Social Security taxes. What credit would I recieve for the Social Security taxes?
Answer: For 2003, the maximum earnings credited for both Social Security and Railroad Retirement purposes is $87,000. And the maximum payroll taxes paid by a worker for Tier 1 and Social Security should not exceed 6.2% or $5,394.
If your combined earnings from your railroad job and your part-time job exceed $87,000, you can claim credit for the excess payroll tax deductions on your federal income tax return for 2003.
There is no annual maximum limit on the portion of the payroll taxes deducted for Medicare. The current Medicare tax rate is 1.45%. You will not be able to receive credit for those deductions even if your earnings are more than $87,000 this year.
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