Tax Issues – Social Security Wage Base Increase for Employers
By: Richard Chapo | Posted: 21st January 2008
As an employer, you are responsible for a bevy of red tape when it comes to your employees. Making things even better, the rules and regulations regarding that red tape gets changed a bit each year.
In 2008, one of the base line employment tax standards is getting a tweak. It has to do with the social security withholdings. In 2007, employers were required to withhold social security taxes equating to 6.2 percent of the employees wages on all wages up to $97,500. Any wages about that amount required no withholding.
In 2008, the figures have been tweaked slightly. Employers should be aware that the $97,500 number has changed. It is now $102,000. This means, of course, that as an employer, you must withhold the 6.2 percent for an additional $4,500 of those employees who earn this type of money.
The Medicare tax is also often lumped together with the social security withholdings. Employers are required to withhold 1.45 percent of the wages of an employee for Medicare. This amount has not changed in 2008 because there is no cap on the tax collection. You must collect it from every employee regardless of whether they make one dollar or a million.
So, how is social security holding up these days? Can you expect to actually receive anything when you retire? Well, it obviously depends on when you will retire. Although benefits are currently holding steady, the government slowly keeps bumping the retirement age at which you can actually claim full benefits. You can expect this to continue. The current age is 65 years and 10 months.
There is, of course, a fundamental problem with social security. It has to do with population. The baby boomers constitute a bulge in the population. As they age, the people following them are placed under more of a burden to support these retirees through social security taxes. The numbers eventually will simply not work out.
All of this essentially means there is a pretty good chance the money you are paying in to social security today will never be returned to you. Since you are legally required to pay it whether you are an employer or employee, there really isn’t any alternative.
Richard A. Chapo is with BusinessTaxRecovery.com - providing information on income taxes for taxpayers.
About the Author
Occupation: Attorney and Traveler
Rick Chapo is with Nomad Journals - makers of
writing journals. He is also with BusinessTaxRecovery.com - information on
taxes.
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Tags: money, good chance, population, wages, social security, red tape, baby boomers, retirement age, bulge, medicare, bevy, tweak, 10 months, fundamental problem