8 Things to Know About Divorce and Taxes
If you’re filing for divorce, or find yourself recently divorced, it’s imperative that you understand how your changing marital status...
A Social Security tax is the tax used to fund the Social Security program, which is levied on employers and employees. It is typically collected through payroll tax or self-employment tax. The Social Security tax pays for the retirement, disability and survivorship benefits received by millions of Americans each year.
Employers usually withhold this tax from the employees’ paychecks and remit it to the government. 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. Social Security tax is also collected to support individuals who are entitled to survivorship benefits - benefits paid to a widow or widower upon the death of a spouse.
As of 2017, the Social Security tax rate is 12.4%. Half of the tax is paid by the employer, and the employee is responsible for paying the other half, that is 6.2%. The Social Security tax rate is assessed on all types of income earned by an employee including salaries, wages, and bonuses. However, there is an income limit to which the tax rate is applied. For 2017, the Social Security tax is taken from income up to an annual limit of $127,200. Any amount earned above $127,200 is Social Security tax-free.
Exemptions from social security tax:
Members of a religious group who are opposed to receiving Social Security benefits during retirement, if disabled, or after death.
Nonresident aliens, or individuals who are neither citizens nor legal residents of the United States, who are in the country temporarily as students.
Nonresident aliens working in the US for a foreign government.
Students who are employed at the same school they are enrolled at, and where employment is contingent on continued enrollment.
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