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Social Security - I. Paying into the system

Social Security taxes
Workers and their employers are taxed on wages and other compensation up to an annual limit to pay for Social Security benefits. Self-employed individuals pay both the worker's and the employer's shares of the Social Security tax.

  1. Employees - For workers employed by somebody else:
    • Employee pays 6.2%
    • Employer pays 6.2%
  2. Self-employed
    • Self-employed individual pays 12.4%
  3. Compensation limit - Social Security taxes are paid on compensation up to set annual limit. Above that limit, no Social Security taxes are paid. The limit is indexed for inflation.
    • 2014 limit: $117,000
  4. Medicare taxes - In addition to Social Security taxes, workers also pay Medicare taxes on their compensation. There is no compensation limit for Medicare taxes.
    • Employee pays 1.45%
    • Employer pays 1.45%
    • Self-employed pays total of 2.9%
II. Eligibility and benefit: Retirement
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