Social Security taxes, also known as Old Age, Survivors and Disability Insurance, is part of the Federal Insurance Contributions Act. As of 2013, the rate is 6.2 percent for both the employer and the employee, or 12.4 percent if you're self-employed. Though there are circumstances under which you won't pay any Social Security tax, there's no set date that you become exempt.
No Age Limit
There's no age limit after which you can stop paying Social Security taxes. And no, even if you're receiving Social Security benefits, that doesn't mean you stop paying Social Security taxes. If you choose to continue work after you start receiving benefits, your employer will still continue to withhold Social Security taxes from your paycheck.
No Earned Income
If you don't have any earned income, you won't have to pay any Social Security taxes that year, regardless of your age. For example, if you're unemployed for the year, you won't pay Social Security taxes on your unemployment benefits. In addition, earned income does not include pension income, so if you stop working and only receive a pension or take distributions from your retirement plan, such as a 401(k) or individual retirement account, you won't pay any Social Security taxes.
Exceeding the Wage Base
On the other end of the spectrum, you won't pay Social Security taxes after your earned income for the year exceeds the Social Security wage base. This amount varies from year to year based on inflation. For example, in 2013 the wage base is $113,700. If you earn $114,700 in 2013, you won't pay Social Security taxes on the last $1,000 of that income.
If you have unearned income during the year, you'll never pay Social Security taxes on that amount. Typical unearned income includes interest, dividends and capital gains income. Similarly, if you receive alimony or child support payments from an ex-spouse, you won't pay Social Security taxes on that income either.
- Social Security Administration: Paying Taxes on Earnings While Receiving Social Security Benefits
- Social Security Administration: Income From Pensions, Annuities, Interest And Dividends
- Internal Revenue Service: What is Earned Income?
- Social Security Administration: Contribution and Benefit Base
- Social Security Administration: Social Security & Medicare Tax Rates
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