How do I fix my social security withholding? It's too large and causing me to owe taxes

What's likely happening is that your tips are being properly reported on your paychecks, but you might not have enough federal income tax being withheld overall. Social Security tax is a flat 6.2% on all earned income up to the wage base limit ($168,600 for 2025), so that part is straightforward. The issue is probably with your federal income tax withholding, not your Social Security withholding. When you get tips added to your paycheck, your employer is correctly withholding the 6.2% for Social Security, but they might not be withholding enough federal income tax to cover your total tax liability. I'd recommend filling out a new W-4 form and consider adding an additional amount to be withheld from each paycheck (you can specify this on line 4(c) of the W-4). Based on how much you've owed the past two years, divide that amount by the number of pay periods remaining in the year to determine how much extra to withhold.

After dealing with a similar situation (bartender here!), I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out my withholding issues. I was constantly owing money at tax time despite my boss claiming everything was set up correctly. What I love about it is that you can just upload your paystubs and W-2s, and it analyzes exactly what's going on with your withholdings. It showed me that while my Social Security withholding was correct, my federal withholding was way too low because of how my tips were being reported. The tool even generated instructions for filling out a new W-4 specifically for my situation. Seriously changed my whole tax situation and I actually got a small refund this year instead of owing!

I wanted to follow up after trying taxr.ai like you suggested. Wow, what an eye-opener! Turns out my first restaurant was withholding correctly, but my second job wasn't accounting for the combined income pushing me into a higher tax bracket. The tool showed me exactly how much extra I needed to withhold from each paycheck. I was really impressed by how it handled my mixed tip situation - it even created a custom withholding strategy for both jobs. Just finished updating my W-4s at both places following the instructions it generated. The whole process took maybe 30 minutes. Thanks for recommending this - definitely worth checking out for anyone with tip income or multiple jobs!

If you're still having issues after adjusting your withholding, you might want to try Claimyr (https://claimyr.com). I spent WEEKS trying to get through to the IRS about a similar withholding problem last year. My employer insisted everything was correct, but I kept owing hundreds at tax time. I was about to give up when I found Claimyr - they got me connected to an actual IRS agent in less than an hour! The agent walked me through exactly how tip income withholding should work and confirmed my employer was calculating it incorrectly. They even sent me documentation I could show my employer. Check out their demo video to see how it works: https://youtu.be/_kiP6q8DX5c - saved me from another year of tax headaches.

Just wanted to update after trying Claimyr. I was extremely skeptical (as you could tell from my previous comment), but I was desperate after another failed attempt to reach the IRS. I'm literally shocked at how well it worked. Got connected to an IRS representative in about 45 minutes (compared to my previous attempts where I never got through). The agent immediately identified that my employer was using an outdated calculation method for tipped income withholding. They explained that tips should be included in the income projection used to calculate federal withholding, not just have the flat FICA taxes applied. The agent emailed me IRS Notice 1036 with the relevant sections highlighted that I could show to my employer's payroll department. Never thought I'd say this, but it was actually a pleasant experience talking to the IRS! Worth every penny not to waste days on hold.

I'm a payroll manager at a restaurant, and I see this problem all the time with our servers. Here's what's probably happening: your employer is correctly withholding the 6.2% Social Security tax on both your regular wages and tips (which is right), but they might not be adjusting your federal income tax withholding to account for your total income. The problem is that many payroll systems treat reported tips as a separate category for withholding purposes. They withhold the required FICA taxes (Social Security and Medicare) but don't automatically adjust the income tax withholding calculation. Ask your employer specifically how they're calculating your federal income tax withholding. They should be projecting your annual income based on both regular wages AND tips, then calculating withholding from that total.

Has anyone tried just asking for a specific additional dollar amount to be withheld instead of trying to fix the underlying calculation? I had the same problem and just put $25 extra per paycheck on line 4(c) of my W-4. Ended up with a small refund instead of owing. Seemed easier than trying to get payroll to understand the proper way to calculate server withholding.