Social Security

 What are the rates of the social security, Medicare and self-employment taxes?

Topic 751 - Social Security and Medicare Withholding Rates

Taxes under the Federal Insurance Contributions Act (FICA) are composed of the old-age, survivors, and disability

insurance taxes, also known as Social Security taxes, and the hospital insurance tax, also known as Medicare taxes.

Different rates apply for these taxes.

The current tax rate for Social Security is 6.2% for the employer and 6.2% (pretax, not included in income) for the

employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or

2.9% total. Refer to Publication 15, (Circular E), Employer's Tax Guide, for more information; or Publication 51,

(Circular A), Agricultural Employer’s Tax Guide, for agricultural employers.

Only the Social Security tax has a wage base limit. The wage base limit is the maximum wage that is subject to the

tax for that year. For earnings in 2015, this base is $118,500. Refer to "What’s New" in Publication 15 for the current

wage limit for Social Security wages; or Publication 51 for agricultural employers.

There is no wage base limit for Medicare tax. All covered wages are subject to Medicare tax.

In tax years 2013 and later, Additional Medicare Tax applies to an individual’s Medicare wages that exceed a

threshold amount based on the taxpayer’s filing status. Employers are responsible for withholding the 0.9% Additional

Medicare Tax on an individual’s wages paid in excess of $200,000 in a calendar year, without regard to filing status.

An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages in

excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year.

There is no employer match for Additional Medicare Tax. For more information, see Questions and Answers for the

Additional Medicare Tax on IRS.gov.

15.3% of .9235 of your schedule C income assuming you are under the wage base.

1 -.0765 to adjust for a fact that a w2 employee doesn’t pay tax on the employer portion of SS

and Medicare. Schedule SE

Form 8959 additional Medicare tax.

 What is the maximum wage base for social security and self-employment taxes?

The wage base limit is the maximum wage that is subject to the tax for that year. For earnings in

2015, this base is $118,500. Refer to "What’s New" in Publication 15 for the current wage limit for

Social Security wages.

 What is the maximum monthly social security benefit?

$2,663 (Forefield)

https://www.socialsecurity.gov/policy/docs/quickfacts/prog_highlights/

Retirement ages;

http://www.ssa.gov/retire2/retirechart.htm

It depends on when they take the benefit.

http://www.ssa.gov/oact/ProgData/ar_drc.html

 How many credits are needed to qualify for social security benefits?

The number of work credits you need to get retirement benefits depends on your date of birth.

If you were born in 1929 or later, you need 40 credits (10 years of work). People born before 1929 need

fewer than 40 credits (39 credits if born in 1928; 38 credits if born in 1927; etc.)

You can find additional information about retirement benefits in our Retirement Planner.

Windfall elimination provision / WEP and GPO – look these up / No SSI While you are in jail.

SSI exempt

SSA pub 10

http://www.ssa.gov/retire2/gpo-wep.htm

UBS has a special section for SSI.

 What is the earliest age at which you may receive social security retirement benefits?

The Full Retirement Age Is Increasing

Full retirement age (also called "normal retirement age") had been 65 for many years. However, beginning with

people born in 1938 or later, that age gradually increases until it reaches 67 for people born after 1959.

The 1983 Social Security Amendments included a provision for raising the full retirement age beginning with

people born in 1938 or later. The Congress cited improvements in the health of older people and increases in

average life expectancy as primary reasons for increasing the normal retirement age.

Social Security EARNINGS TEST

http://www.ssa.gov/oact/cola/rtea.html

 How are my retirement benefits calculated?

http://www.ssa.gov/pubs/EN-05-10070.pdf

The procedure to calculate benefits involves three steps.

 First, a worker’s previous earnings are restated in terms of today’s wages to reflect wage growth.

 Second, earnings for the highest 35 years are averaged and divided by the number of months in

35 years to arrive at Average Indexed Monthly Earnings (AIME).

 Third, the Social Security benefit formula is applied to AIME to produce the Primary Insurance

Amount (PIA), the benefit payable at the Full Retirement Age (FRA).

Work at least 35 years.

If you have less than 35 years of earnings (for example, you were laid off and out of work for

three years during your working years), you may want to work enough additional years so you

have a full 35 years of earnings. Otherwise, the Social Security Administration will average

in zeros for any years less than 35.

The net result? Your Social Security retirement benefit will be lower, due to the zero earning

years.

Example: Jill earned $50,000 for 35 years; her average earnings per year are $50,000. Jack also

earned $50,000 for 35 years, but in three of those years, he had no income due to layoffs. His

average earnings over 35 years? $45,714, almost $4,300 less than Jill, even though he earned

the same wage. If he works three additional years at $50,000, he will have a full 35 years of

earnings, and then his average earnings would rise to $50,000 annually.

- See more at: http://www.myretirementpaycheck.org/social-security/how-are-benefits-

calculated.aspx#sthash.yLuUnHaG.dpuf

 What are the earning limits for recipients of social security benefits?

The income limit for the SSI program is based on something called the federal benefit rate (FBR).

The federal benefit rate represents both the SSI income limit and the maximum federal monthly

SSI payment. In 2015, the FBR is $733 per month for individuals and $1,100 for couples. (The

FBR increases annually if there is a Social Security cost-of-living adjustment.)

To qualify for SSI, your countable monthly income cannot exceed the FBR. However, the SSA

counts only some of your income when it determines whether your income is over the income

limit. For instance, if you are earning money from work, less than half of your monthly earnings

are counted toward the income limit, so you can make more than $733 per month (in 2015). This

makes it difficult to know for sure whether your income falls under the SSI income limit. (To find

out which of your income is counted, see our article on What Counts as Income Toward the SSI

Income Limit.)

http://www.disabilitysecrets.com/resources/social-security-disability/supplemental-security-

income-ssi/income-limits-eligibility.htm

 What income counts toward the earnings test limit?

 Are social security benefits taxed?

Some people have to pay federal income taxes on their Social Security benefits. This

usually happens only if you have other substantial income (such as wages, self-

employment, interest, dividends and other taxable income that must be reported on your

tax return) in addition to your benefits.

No one pays federal income tax on more than 85 percent of his or her Social Security

benefits based on Internal Revenue Service (IRS) rules. If you:

 file a federal tax return as an "individual" and your combined income* is

o between $25,000 and $34,000, you may have to pay income tax on up to

50 percent of your benefits.

o more than $34,000, up to 85 percent of your benefits may be taxable.

 file a joint return, and you and your spouse have a combined income* that is

o between $32,000 and $44,000, you may have to pay income tax on up to

50 percent of your benefits

o more than $44,000, up to 85 percent of your benefits may be taxable.

 are married and file a separate tax return, you probably will pay taxes on your

benefits.

http://www.ssa.gov/planners/taxes.htm

Living arrangements under SSi

http://www.ssa.gov/ssi/text-living-ussi.htm

 If social security is my only form of income, do I need to file a tax return?

Generally no. Pub 915 Page 4

Benefits are included in the taxable in-come (to the extent they are taxable) of the person who

has the legal right to receive the benefits.

 If my spouse doesn't have enough work to qualify for Social Security or Medicare. Can he/she

qualify to receive a retirement benefit based on my record?

Even if he or she has never worked under Social Security, your spouse may be able to get

benefits if he or she is at least 62 years of age and you are receiving or eligible for retirement or

disability benefits. He or she can also qualify for Medicare at age 65.

http://www.ssa.gov/retire2/yourspouse.htm#a0=0

 Can I receive reduced retirement benefits at age 62 under my record and then at full retirement

age receive full spouse's benefits?

 What social security retirement benefits are available for a divorced spouse?

If you are divorced, your ex-spouse can receive benefits based on your record (even if

you have remarried) if:

 Your marriage lasted 10 years or longer;

 Your ex-spouse is unmarried;

 Your ex-spouse is age 62 or older;

 The benefit that your ex-spouse is entitled to receive based on his or her own

work is less than the benefit he or she would receive based on your work; and

 You are entitled to Social Security retirement or disability benefits.

If you have not applied for retirement benefits, but can qualify for them, your ex-

spouse can receive benefits on your record if you have been divorced for at least

two years.

If your divorced spouse remarries, he or she generally cannot collect benefits on your

record unless their later marriage ends (whether by death, divorce or annulment).

If your divorced spouse is eligible for retirement benefits on his or her own record we

will pay that amount first. But if

 the benefit on your record is a higher amount, he or she will get a combination of

benefits that equals that higher amount (reduced for age).

 your divorced spouse has reached full retirement age and is eligible for a

spouse's benefit and his or her own retirement benefit, he or she has a choice.

Your divorced spouse can choose to receive only the divorced spouse's benefits

when he or she applies online and delay receiving retirement benefits until a later

date. If retirement benefits are delayed, a higher benefit may be received at a

later date based on the effect of delayed retirement credits.

If your former spouse

 continues to work while receiving benefits, the same earnings limits apply to him

or her as apply to you. If he or she is eligible for benefits this year and is also

working, you can use our earnings test calculator to see how those earnings

would affect those benefit payments.

 will also receive a pension based on work not covered by Social Security, such

as government or foreign work, his or her Social Security benefit on your record

may be affected.

http://www.ssa.gov/retire2/yourdivspouse.htm

 What are the requirements for a survivor to receive Social Security benefits?

 What is the maximum family benefit?

Maximum Family Amount

There's a limit to the amount that family members can receive each month. The limit varies, but it

is generally equal to about 150 to 180 percent of the basic benefit rate.

If the sum of the benefits payable to family members is greater than this limit, the benefits will be

reduced proportionately. (Any benefits paid to a surviving divorced spouse based on disability or

age won't count toward this maximum amount.)

http://www.ssa.gov/survivorplan/onyourown5.htm#fmax

 I am receiving Social Security disability benefits. Will my benefits be affected if I earn additional

money?