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Social Security wages are part of the FICA (Federal Insurance Contribution Act) along with Medicare. These taxes are withheld by the employer so that they can pay these taxes to the IRS as required. Both Social Security and Medicare are withheld in this way. If you have any questions about your social security wages or FICA taxes be sure to Dana M. Ronald’s team at Tax Crisis Institute in California or Nevada.

How To Calculate Social Security Wages?

What Are Social Security Wages? 

Social Security Wages are withheld by your employer to pay the IRS. A set percentage is taken from your paycheck each month. 

How Do Social Security Wages Work?

Each month a set percentage is taken from your paycheck by your employer so that they can pay the IRS. The IRS determines the amount annually and is set nationwide. If you talk to the Tax Crisis Institute in Bakersfield, Orange County, Los Angeles, or Las Vegas, our expert team of tax professionals will be able to help you. 

Both the employer and the employee are required to pay these taxes by law. The employer will withhold from the employee the same amount they have to pay. For example. If the total Social Security tax is 12%, the employer will pay 6% of their gross income and withhold 6% from the employee.

These taxes go into a pool that the IRS uses to provide benefits to those who cannot work. This could be due to disability, retirement, or the survivor of a deceased wage earner.

How Do I Apply To Recieve Social Security Benefits? 

Applications can be done online through the Social Security website or at one of the local Social Security offices in your area. You will need to fill out a form to start receiving Social Security benefits and submit it to the Social Security office. 

Once the application is submitted the Social Security will look over the application to verify eligibility. This process usually takes about six weeks. If you create an account online through the Social Security website you will be able to monitor the status of your application. If you are not comfortable creating an account for your Social Security, you can the toll-free number listed on their website.

Social Security Vs. Medicare?

Social Security wages and Medicare both fall under FICA taxes. The percentage for Medicare is typically lower at around 1.3% – 1.5%. Just as with Social Security, this percentage is determined annually by the IRS and put out as a law. Both the employer and the employee participate in Medicare the same way as in Social Security.

Which Types of Payments Are Exempt?

How To Calculate Social Security Wages?

There are a few types of payments that are exempt from FICA taxes including Social Security wages. There are only a select few groups that are exempt from paying Social Security taxes. These are:

  • Religious groups
  • Nonresident aliens
  • Student exemption (temporary)
  • Foreign government employees

Each group has its own application process and qualifying stipulations. Religious groups must be from a list of qualifying religious groups. These are typically established and recognized religions. 

Nonresident aliens working in the United States for a foreign government are exempt but other nonresident aliens must still pay. Students can only apply if working for the university and the university is not waiving any part of their tuition.

Is Social Security Income Taxable?

Social security wage benefits are taxable but not in all cases. As a general rule, if Social security wages are your only income, you will not be taxed. Other income can be taxed if you earn more than $600. However much you are taxed, your social security benefits will never pay taxes on more than 85% of your social security income. 

This can be a confusing web of retirement income, social security income, and income from other sources. If this is not clear to you should talk to a tax advisor like tax professional Dana M. Ronald. Any of his locations in Bakersfield, CA; Orange County, CA; Los Angeles, CA; or Las Vegas, NV can help you out navigating this area.

How to Calculate Social Security Wages?

Calculating social security wages can be confusing to first-time business owners. Limitations apply to how much is taxed above set numbers for the different FICA taxes.  The Tax Crisis Institute in California and Nevada can help you out to determine the amount before you miscalculate your payment to the IRS.

The general rule is all employees will pay a certain percentage as determined by the IRS and will be withheld from their income. As an employer, you will also pay a match of that amount as applied to each employee. There are, however, some exceptions. An additional percentage is withheld if the employee makes above $250,000. There are also tax floors and ceilings that must be dealt with. If you end up paying the IRS late, you may be subject to late fees as well.

What to Do When You Fall Behind on Social Security Wages?

Falling behind on Social Security Wages can happen to employers who are first starting out, have an increase in employees, or just have a lot of different employees at various wage levels. Each situation brings about complications. We’ll help you if you’re confused about exemptions or surplus taxes.  

If you need to make federal tax payments, you can either do it online through Electronic Federal Tax Payment System (EFTPS) or at an authorized bank. In this case, you will need the 8109 which can be acquired online, or by calling the IRS and having them mail it to you. Make sure you pay as early as possible to avoid accumulating late fees.

Call us today so we can help you calculate your social security taxes. We’ll be happy to help you.