  PO Box 2214 Oregon City OR 97045 503-656-0699 |
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Date last modified: 10/24/11 |
Social Security The Social Security 2012 wage base is $110,100, meaning Social Security tax is assessed on all wages up to this amount. The Medicare tax is assessed on all wages. For 2011, FICA (Social Security) withholding was temporarily reduced for employees, only. The rate is 4.2% of gross wages and 1.45% for Medicare. Employers pay 6.2% of gross wages and match the Medicare tax for each employee. Self-employed taxpayers are assessed the full 13.3% in 2011. In 2012, Social Security considers full retirement age to be 66 years. The full retirement age is creeping up to age 67. See the chart below to determine the age when you will be eligible to collect 100% of your Social Security benefit. Social Security mails an annual statement explaining your eligibility and projected benefit amount. Social Security recipients younger than the full retirement age can earn up to $14,160 in 2011. For every $2 in earnings over that amount, benefits are reduced $1. Retirees reaching full retirement age in 2011 can earn up to $37,680 during 2011 prior to reaching full retirement age. One dollar in benefits will be withheld for every $3 in earnings over the limit. When the full retirement age is reached, there is no limit on earnings. Up to 85% of your Social Security benefits could be subject to Federal Income Tax, depending on your total income. Oregon does not tax Social Security. You may want to check other state laws for their tax treatment. Social Security recipients can opt to have federal tax withheld from their monthly benefit checks. The form to use is a W4-V.
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