On Wednesday, October 30, 2013, the Social Security Administration (SSA) announced its “baselines” for 2014. In this post, I will cover some of the items that might be of interest to most.
The tax rates for the SSA remain the same: Social Security Old Age, Survivors, and Disability Insurance (OSADI), 6.20% and Medicare Health Insurance (HI) 1.45% (total 7.65%), with employers paying their 7.65% for each employee as well. Self-employed folks pay 15.30%, but there is some tax maneuvering at year end for the self-employed. Important to note, AS OF 01/01/2013, individuals with earned income of more than $200,000 ($250,000, Married filing jointly), will be paying an additional 0.9% in Medicare Taxes!
The MaximumTaxable Earnings for Social Security OSADI has increased from $113,700 in 2013 to $117,000 in 2014, an increase of $3,300 or 2.9%.
Tax Exempt Earnings while receiving Social Security OSADI have also changed:
For those before Full Retirement Age (65, born before 1937; 67, born after 1937): $15,120/yr., 2013; $15,480/yr., 2014, an increase of $360 or 2.4%.
($1.00 in benefits will be withheld for every $2.00 earned above the limit)
For those after Full Retirement Age (65, born before 1937; 67, born after 1937): $40,080/yr.; $41,400/yr., 2014, an increase of $1,320 or 3.3%.
($1.00 in benefits will be withheld for every $3.00 earned above the limit)
The earnings limitations shift the month you reach Full Retirement Age.
Just as a note, the 0.9% increase in the Medicare Tax for high earners, if you can consider $200,000/$250,000 a high earner, is simply a tid-bit of our current government’s methods of raising tax rates, as opposed to raising the base that pay taxes. Personally, I am a believer in expanding the tax base rather than raising the tax rates; increase job growth, get more folks back to work and put work/training requirements on low/no income folks to get them off of the “entitlement life” roles and on to the “fulfilling life” roles.