Can I opt out of Social Security/Medicare tax withholding from my paycheck?

Thanks for this explanation. I'm curious though - if I'm getting two W2s from technically the same employer, isn't there some double-taxation happening with Social Security? Like if I earn enough from one W2 to hit the Social Security wage base limit, would I still have to pay it on the second W2 too?

If both W-2s are from the same legal employer (same EIN - Employer Identification Number), then the employer should be tracking your total earnings across both payments when applying the Social Security wage base limit. Once you reach the annual limit (which is $168,600 for 2024), Social Security tax withholding should stop regardless of which paycheck it comes from. However, if your "one employer" is actually structured as two separate legal entities with different EINs, each entity would treat you as a separate employee and withhold Social Security independently. In this case, you might indeed have excess Social Security withholding, but you would receive this back when you file your tax return.

Does it actually work with multiple W2s from the same employer? My company splits my pay like this too (base salary on one W2, bonus and commission on another) and it's super confusing for tax planning.

I'm skeptical about these tax tools. How does it handle the Social Security wage base limit across multiple W2s? My accountant told me that's a common issue with split W2 situations where you can end up overpaying.

Yes, it specifically handles multiple W2s really well. You just upload all your documents and it recognizes the relationship between them. It was actually designed for complicated situations like this where traditional tax software gets confused. The Social Security wage base limit tracking is one of its strengths. It projects your annual earnings across all income sources and shows exactly when you'll hit the limit. In my case, it identified about $2,300 in excess Social Security withholding I would have paid due to the split W2 situation, and helped me plan to claim that refund correctly.

How does this service actually work? Do they have some special line to the IRS or something? I've literally never been able to get through to a human when calling the IRS.

Yeah right. Nobody gets through to the IRS. I'll believe it when I see it. Sounds like you're just promoting some service that'll take people's money and leave them on hold just like if they called themselves.

They use an automated system that navigates the IRS phone tree and waits on hold for you. When they get a human on the line, you get a call to connect with the agent who's already waiting. No special access - they're just doing the waiting part for you. Yes, it actually works! That's why I shared the video link so you can see it in action. They don't promise immediate access, just that you don't have to be the one sitting on hold for hours. The agent I spoke with was incredibly helpful with my multiple W2 question.

I actually hadn't thought about that! So you're saying I could potentially set the 401k contribution to 0% on the smaller paycheck and increase it on the larger one? Wouldn't that still run into the same issue where I'd use up too much of the larger paycheck for living expenses though?

Right, you can definitely adjust the contribution percentages between the two paychecks. The trick is to find the right balance. It's not necessarily about making one 0% and one higher - you can calibrate both percentages to optimize your cash flow. For example, if your larger paycheck can handle a slightly higher percentage without impacting your living expenses too much, even a small adjustment might free up enough room in the smaller paycheck to make a difference.

Does this apply if the W2s are from completely different companies? I work a full-time job plus a side gig that gives a W2 (not 1099), and I'm wondering if I might hit that limit this year with the combined income.

Yes, this absolutely applies when you have W2s from completely different companies! Each employer only tracks their own payments to you, so if your combined W2 income exceeds the Social Security wage base limit, you'll likely have excess withholding. For example, if Company A withholds Social Security tax on $100,000 and Company B withholds it on another $80,000, you'll have paid Social Security tax on $180,000 total income even though the 2024 limit is $168,600. That means you overpaid on $11,400 worth of wages. The good news is you can claim this excess as a refund on your tax return. Most tax software will automatically calculate this for you when you enter multiple W2s, but it's definitely something to keep an eye on as your side gig income grows!

This is really helpful advice! I hadn't thought about the "back-loading" strategy before. Quick question though - when you say you dramatically increased your 401k contribution in the final months, how did you make sure you didn't exceed the annual limit? I'm worried about accidentally going over and having to deal with excess contribution penalties. Also, for someone like me who's new to navigating multiple W-2s, is there a rule of thumb for how to calculate when you might hit that Social Security wage base limit? I want to plan ahead like you did but I'm not sure how to project it accurately across both paychecks.

Great questions! For the 401k annual limit, the key is tracking your year-to-date contributions across both W-2s. Most payroll systems will show this on your pay stub, and you can also check with HR or your 401k provider. The 2024 limit is $23,000 (or $30,500 if you're 50+), so I always aimed to stay a few hundred dollars below to give myself a buffer. For projecting the Social Security wage base limit, I created a simple spreadsheet tracking my gross pay from both W-2s throughout the year. Since you know your salary/wage rates, you can project forward to estimate when you'll hit $168,600 total. The tricky part with multiple W-2s is making sure your employer's payroll system is actually coordinating this - if they're separate legal entities with different EINs, they might not communicate about your combined earnings. One tip: if you're getting close to either limit (401k or Social Security wage base), consider calling your payroll department to confirm how they're tracking things. It's better to know now than be surprised later!

This is really smart advice about coordinating deduction timing between paychecks! I never thought about asking payroll to move things like health insurance premiums to the higher W-2. That could definitely free up some room in the smaller paycheck for 401k contributions. Quick question about the HSA suggestion - if I'm already maxing that out, are there any other lesser-known pre-tax benefits that might help? I feel like I'm missing some opportunities to reduce my taxable income and create more breathing room for retirement contributions. Also, when you mention using the W-4 "additional amount to withhold" section in reverse, what exactly do you mean by that? I'm intrigued but want to make sure I understand the implications before trying anything that might create underpayment issues.

Great point about coordinating deduction timing! I hadn't considered that approach either. Regarding the W-4 "additional amount to withhold" section - I think @6fb380051d08 might be referring to the fact that you can technically enter a negative number or use other W-4 strategies to reduce withholding below zero, but this is extremely risky territory. You'd essentially be having less federal tax withheld than you actually owe, which could lead to underpayment penalties and a big tax bill in April. For lesser-known pre-tax benefits, you might want to look into: - Commuter/parking benefits (up to $300/month for 2024) - If your employer offers it, adoption assistance or tuition reimbursement - Some employers offer additional voluntary benefits like legal insurance or identity theft protection that come out pre-tax But honestly, if you're already maxing HSA and have your federal withholding at $0, you're probably already optimized on the tax side. The payroll coordination strategy seems like your best bet for creating the cash flow you need.

The "true-up" contribution point is brilliant! I had no idea some employers offered that. It would definitely change the math on contribution timing if you knew you'd get the full match regardless of when you hit the annual limit. @aed3361037ea - when you moved your pre-tax deductions between W-2s, did you have to go through HR or was it something you could adjust in your benefits portal? I'm wondering how complicated that process typically is, especially mid-year. Also, for anyone else following this thread who's in a similar boat - I just realized that if you're close to the Social Security wage limit, you could actually calculate pretty precisely when that relief kicks in. If you know your pay schedule and current year-to-date earnings, you can project exactly which paycheck will push you over $168,600 and plan your 401k increase accordingly. Might be worth creating a simple spreadsheet to track this!

@aed3361037ea This is such valuable insight about the "true-up" contributions! I had never heard of this before either. For those wondering about moving pre-tax deductions between W-2s, I went through this process last year. In my case, I had to contact HR directly since the benefits portal didn't have an option to specify which "entity" the deductions came from (even though it was technically the same employer). They were surprisingly accommodating once I explained the cash flow issue with trying to max out my 401k. The spreadsheet idea for tracking Social Security wage base timing is genius! I'm definitely going to set that up. It would be so helpful to know exactly when that 6.2% relief kicks in so you can plan the 401k boost accordingly. Has anyone here actually done this calculation and found it made a significant difference in their final contributions?