Social Security Among Key Tax Changes in 2011
Social Security taxes have been reduced in 2011 by 2%. This means you can increase your 401K contribution by 2% and see NO reduction in your take-home pay!!!
The Social Security tax withholding rate has decreased from 6.2 percent to 4.2 percent for all employees for 2011. This 2 percent tax reduction is applied to employee wages up to the Social Security wage base of $106,800. Any individual earning $106,800 or more in wages in 2011 will receive a benefit of $2,136.
If there are two spouses with wage income, each spouse will derive this tax benefit. Self-employed individuals will also receive the 2 percent tax reduction as the Social Security portion of self-employment tax will be 10.4 percent as opposed to 12.4 percent. Medicare tax of 1.45 percent will continue to be withheld on all wage income with no ceiling (2.9 percent self-employment tax).
Employers continue to pay 6.2 percent Social Security tax on employee wages. This provision replaces the Making Work Pay Credit in effect for 2009 and 2010 that provided a credit of up to $400 for single taxpayers and up to $800 for married joint filers.Michael Brandt United Lending, LLC 512-922-3144 firstname.lastname@example.org www.unitedbrandt.com