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BenefitsLink > Q&A Columns >

Stop, Look & Listen: Railroad Retirement Benefits Q&A

Answers are provided by Robert S. Kaufman

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.

Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.

Copyright 1997-2017 Robert S. Kaufman
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