Social Security Tax


DEFINITION of 'Social Security Tax'

The tax levied on both employers and employees used to fund the Social Security program. Social Security tax is usually collected in the form of payroll tax or self-employment tax. The Social Security tax pays for the retirement and disability benefits received by millions of Americans each year.

BREAKING DOWN 'Social Security Tax'

The funds collected from employees for Social Security are not put into a trust for the individual employee currently paying into the system, but rather are used to pay existing retirees. Also, Social Security tax can refer to the tax on the benefits received from Social Security. In the past, Social Security was tax free, but today if you have other substantial income along with your benefits, you will likely end up paying some tax on them.

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  1. Does money in a Flexible Spending Account (FSA) roll over?

    As of 2015, according to IRS regulations, the maximum amount of funds in a Flexible Spending Account (FSA) that can be carried ... Read Full Answer >>
  2. What is the Social Security tax rate?

    The Social Security tax rate is 12.4% as of 2015. Of that amount, the employee is responsible for half, or 6.2%, and the ... Read Full Answer >>
  3. Are all disabilities treated the same for Substantial Gainful Activity (SGA) thresholds?

    Section 520 of the Social Security Act indicates that U.S. citizens are eligible to receive disability benefits if they are ... Read Full Answer >>
  4. How do I calculate my Social Security break-even age?

    Individuals nearing retirement can implement a number of strategies to cover living expenses during their post-working years. ... Read Full Answer >>
  5. Is there any way to opt out of paying Social Security?

    Exemptions from the Social Security program exist for a small number of groups. These individuals are not responsible for ... Read Full Answer >>
  6. How are taxes treated in the consumer price index (CPI)?

    The answer to the question of how taxes are treated in the Consumer Price Index, or CPI, relates to the overall questions ... Read Full Answer >>
  7. Who is exempt from paying Social Security taxes?

    Social Security is a U. S. federal program that provides recipients with benefits, including retirement and disability income, ... Read Full Answer >>
  8. What are the Social Security tax caps?

    The Social Security tax cap limits the amount of annual wages or self-employment income that is eligible for Social Security ... Read Full Answer >>
  9. How much of my income goes to Social Security taxes?

    An employee's portion of social security tax is 6.2% of his or her social security wages. Employers are taxed at the same ... Read Full Answer >>
  10. Must I pay Social Security taxes on my earnings after full retirement age?

    Everyone must make applicable Social Security contributions on income, even those working past the full retirement age. Working ... Read Full Answer >>

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