The Tax Questions Blog

Posts Tagged ‘social security’

LatinAmericaLaw

The general statutory corporate income tax rate for Salvadoran entities including Salvadoran branches of foreign companies is 25% on net income.

Disabilities in Old, Young Studied in Developing Nations

Question: Accounting help! help appreciated!?

Karl works as a financial analyst for a salary of $2,700 per week. Prior to this pay period his cumulative earnings were $67,500. His federal income tax withholding is 15% of his gross pay. The FICA tax rate is 6.2% for Social Security and 1.45% for Medicare. Assume a maximum taxable earnings limit for Social Security of $100,000. Calculate his net pay for the week ending June 27, 2008.

calulate

1. What amount should you use as Chandra’s gross pay?

2. Calculate the amount of income tax to withhold

Answer: 1. What amount should you use as Chandra’s gross pay?

Gross pay is the $2,700 per week that Karl earns

2. Calculate the amount of income tax to withhold

Since Karl's prior earnings ($67,500) plus his earnings for the current week ($2,700) equal to less than the FICA limit of $100,000, the full pay for the week is subject to the 6.2% FICA tax.

So the taxes withheld are:

Federal Tax - $2,700 X 15% = $405
FICA - $2,700 X 6.2% = $167.40
Medicare tax - $2,700 X 1.45% = $39.15

Total tax = ($405 + $167.40 + $39.15) $611.55

3. Calculate the Net Pay for the week.

Karl's Net Pay is equal to ($2,700 - $611.55) $2,088.45

New Laws Effective January 1, 2010

The following legislation will take effect beginning Jan. 1, 2010.

Question: Social Security disability back pay - is it taxable ? Received this year for 3 previous years.?

Answer: Supplemental Security Income (SSI) payments are never taxable. However, OASDI (regardless if it is age related or disability related) is potentially taxable income. You don't have to do an amended return. Instead, figure out how much of the benefit would have been taxable income in each of the earlier years, then add it all together for the current year.

For example, say you got $5,000 for each year 2004, 2005, and 2006. You go back to your 2004 tax return and find out that 85% of the payment would have been taxable. For 2005, you find out that 50% would be taxable. And, for 2006 you find out that 0% is taxable. So, in 2006, you would enter $15,000 in box 20a "Social Security Benefits" and you would enter $6,750 in box 20b "Taxable amount".

It is best to see a tax professional to do this because it can be a little confusing figuring out how to calculate the percentage.

Hope this answer helped.

Who pays tax on disability benefits?

Social Security disability benefits are taxable, depending on your level of income.

Question: Can anyone explain how to solve this equation?

The maximum taxable wage base is $35,000. For wages less than the maximum taxable wage base, Social Security contributions by employees are 7.65% of the employee's wages. (Source: Social Security Administration)

(a) Find an equation that expresses the relationship between the wages earned (x) and the Social Security taxes paid (y) by an employee who earns less than the maximum taxable wage base.

(b) For each additional dollar that an employee earns, how much does his or her Social Security contribution increase? (Assume that the employee's wages are less than the maximum taxable wage base.)

(c) What Social Security contributions will an employee who earns $29,066 (which is less than the maximum taxable wage base) be required to make?

I'm so lost someone please help!
Can anyone EXPLAIN how you find the answer?

Answer: The maximum taxable wage base is $35,000. For wages less than the maximum taxable wage base, Social Security contributions by employees are 7.65% of the employee's wages. (Source: Social Security Administration)

(a) Find an equation that expresses the relationship between the wages earned (x) and the Social Security taxes paid (y) by an employee who earns less than the maximum taxable wage base.

ANSWER: y = 0.0765x................x < $35,000

(b) For each additional dollar that an employee earns, how much does his or her Social Security contribution increase? (Assume that the employee's wages are less than the maximum taxable wage base.)

ANSWER: For each additional dollar that an employee earns, his or her Social Security contribution increases by $0.0765 or 7.65 cents.

(c) What Social Security contributions will an employee who earns $29,066 (which is less than the maximum taxable wage base) be required to make?
y = 0.0765(29,066)
y = $2,223.549

ANSWER: An employee who earns $29,066 will be required to contribute $2,223.549

Social Security: Raising or Eliminating the Taxable Earnings Base $0.99 Social Security taxes are levied on covered earnings up to a maximum level set each year. In 2010, this maximum-or what is referred to as the taxable earnings base-is $106,800. The taxable earnings base serves as both a cap on contributions and a cap on benefits. As a contribution base, it establishes the maximum amount of each worker's earnings that is subject to the payroll tax. As a benefit bas...

Raising Living Standards: The Role of Tax Policy

Speech delivered by John Whitehead, Secretary to the Treasury AGM of the New Zealand Institute of Managers

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