It is the maximum amount that is being deducted for social security deduction. It is also the maximum amount that is being considered when calculating someone’s social security benefits.
In 2011, $106,800 it the maximum wage on which social security tax is being deducted. Generally 6.2% social security tax is being deducted from wage unto this limit. But for the year 2011, it is 4.2%. 6.2% is being paid by employer and 6.2% is being paid by employee.
When an employee works for more than one employer in a give year, this deduction could exceed the cap. If exceeded, employee can claim this while filing tax return. You just need top mention it on your tax return filing and you will get it in tax return. Employer can not claim this overpaid tax.