The Social Security Administration recently announced some
changes that will go into effect in the coming tax year. The organization has
set the maximum amount of wages to be subjected to the old age, survivors, and
disability insurance tax. The amount, as of 2019, will be $132,900, an increase
from the previous tax year.
Tax Rate
The tax rate for this tax is 6.2%, with both the employee
and employer being responsible for paying the same amount. Self-employed
workers, however, will be responsible for paying the tax at a 12.4% rate to the
limit.
Medicare Hospital Insurance tax
It is also important to note that the Medicare hospital
insurance tax is set at 1.45% for the coming tax year, with employees and
employers each paying the same amount and with the self-employed paying 2.9%.
Social Security Benefits
One final announcement from the organization was that those
who receive Social Security benefits would get a 2.8% cost of living
adjustment. The Social Security Administration has also stated that the
earnings test related to how much income benefit recipients may earn without a
reduction of benefits is $17,460 before reaching retirement age. The amount
taxpayers may make in the year they reach full retirement is $46,920.
Anytime changes like these are made, people are often
confused about if and how they will be affected. If you are unsure of how these
changes affect you or have questions about how to most benefit from these
changes, speak with a tax professional. The right professional can help to
ensure that you can navigate any tax changes with the most benefit and the
least detriment to you, yet another reason why having a good tax professional
on your side is always a smart idea.