By: Sahil Luthra
The Federal Govt. sets a limit on the amount of earnings subject to Social Security tax.
Social Security tax is paid as a percentage of net earnings and has an annual limit.
The amount of the benefits received by individuals and couples rose to 5.9%.
The Social Security tax, also known as the “Old-Age, Survivors, and Disability Insurance (OASDI) tax,” funds the Social Security program in U.S.
According to the SSA, more than 65 million people were receiving Social Security payments of around $1,439 per month.
According to the SSA, approximately 70 million Americans will receive a slightly larger amount of $1,657 due to the COLA.
The first part of tax is the payroll tax mandated by the Federal Insurance Contributions Act (FICA).
Payroll taxes are based on an employee’s net wages, salaries, and tips, withheld by employer and forwarded to govt on employee's behalf.
Social Security taxes as part of the quarterly estimated taxes you submit to the Internal Revenue Service (IRS), if you are self employed.
Self-employed are considered both the employee and the employer, you are responsible for paying the full 12.4%.
The Social Security portion is taxed at 6.2% on earnings up to the maximum taxable amount, while the Medicare portion is taxed at 1.45%.
Certain individuals, some religious groups, non-resident aliens, students working at their university may claim an exemption and not be required to pay Social Security taxes.
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