Understanding social security tax on tips - help needed SOS

This is actually a common issue with tipped income. When you have multiple jobs, sometimes the social security withholding doesn't calculate correctly across them. Here's what's likely happening: Social security tax is 6.2% on wages up to the annual limit ($168,600 for 2025). Since you have two jobs, your main job is withholding social security tax, and your part-time job is also withholding it. The system is designed so you pay exactly 6.2% on your total eligible income, no more and no less. When you add that second W-2 with mostly tip income, the tax software recalculates your entire social security tax obligation based on your combined income from both jobs. The drop in refund suggests that your part-time employer might not have withheld enough social security tax on those tips. Try this: Check if the social security tax withheld on your part-time W-2 equals exactly 6.2% of your total income there (including tips). If it's less, that explains the difference - you owe the remaining social security tax on those tips.

After dealing with a very similar issue last year as a server, I found this tool called taxr.ai at https://taxr.ai that really helped me understand what was happening with my tip income. I uploaded my W-2s and it analyzed exactly how the social security taxes were being calculated. Turns out my employer wasn't properly reporting all my tips for social security purposes, which is why I got hit with a huge tax bill. The site breaks down exactly how the FICA taxes work with tips and tells you if your employer is withholding the right amount. It saved me from a major headache by showing me exactly where the discrepancy was coming from.

I just tried taxr.ai after seeing it mentioned here and wow, it actually solved my problem! I had the exact same issue with my tip income from two different restaurants. The tool showed me that one employer wasn't withholding the correct social security amount on my declared tips, which is why my refund was dropping so much when I entered that W-2. I was able to go back to my employer with the specific numbers and get it corrected before filing. What I really appreciated was how it showed the exact calculation for what should have been withheld versus what actually was. Saved me about $1,800 in unexpected taxes! Definitely worth checking out if you're having weird issues with tip income and social security withholding.

Hey everyone, I had this same issue with my server job last year. After trying for WEEKS to get through to the IRS to understand what was happening with my social security taxes on tips, I found this service called Claimyr at https://claimyr.com that got me through to an actual IRS agent in about 20 minutes. I was skeptical at first, but they have this demo video that shows how it works: https://youtu.be/_kiP6q8DX5c. The agent was able to explain exactly how tip income is supposed to be reported for social security tax purposes and confirmed that my employer wasn't processing it correctly. Turns out there's a special form (4137) you might need to file if your employer didn't withhold enough social security tax on your tips. The IRS agent walked me through everything and saved me from a much bigger headache later on.

OK I have to admit I was completely wrong. After my last comment, I was still stuck with my tip income problem and getting desperate, so I tried Claimyr. Honestly expected it to be a waste of time. Well, I got a call back in about 45 minutes connecting me to an actual IRS agent. The agent reviewed my situation and confirmed that I was getting hit with additional social security tax because my employer wasn't properly withholding on all my declared tips. They explained I needed to file Form 4137 for the uncollected social security and Medicare tax. This solved the exact problem the original poster was having - the huge drop in refund was from the uncollected social security tax being calculated on their tip income. Can't believe I actually got a straight answer after weeks of frustration.

Have you checked to see if your tips are "allocated tips"? Look at box 8 on your W-2. If there's an amount there, these are tips your employer assigned to you based on sales, and they don't withhold social security tax on these. You're responsible for paying the full social security tax on allocated tips yourself, which could explain the huge drop in your refund.

From what I can tell after reading your situation, I think FreeTaxUSA might be calculating something called "excess social security tax withheld." When you have multiple jobs and your combined income has had too much social security tax withheld (above the 6.2% on the maximum wage base), you get a credit for the excess. When you enter only your full-time W-2, the software might be calculating a refund of excess social security withholding. Then when you add the part-time W-2, it realizes you haven't actually exceeded the wage base, so that "excess" disappears. Try this: enter BOTH W-2s, then look at the detailed tax calculation in FreeTaxUSA and check the line for "Excess social security tax withheld" to see if it changed.