@chrisjchrisj wrote:
Hi,
I read that the maximum earnings for 2019 is $132,900, correct?
Does that mean if someone earns over that amount, for example $150,000 in 2019, that the amount of social security taxes/contributions won't go any higher for that person than as if he made $132,900 in 2019? He won't be taxed on those earnings between $132,900.01 and $150,000.00?
I'm looking for clarification, please.
That is true - and the reason is because there is also a correlation between the tax max and the max benefit.
from the link @fffred gave you -
Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation for a given year. The same annual limit also applies when those earnings are used in a benefit computation. This limit changes each year with changes in the national average wage index. We call this annual limit the contribution and benefit base. This amount is also commonly referred to as the taxable maximum. For earnings in 2020, this base is $137,700.
If you only have one employer, it is easy to keep up with - the problem comes in sometimes if you have more than one employer and make over the tax max between them. Then it comes back as a refund if overpaid as @fffred said.
Yep, it is nice to get a bonus when that annual limit is reached and SS payroll taxes stop (6.2%) - Medicare taxes (1.45%) taxes DO NOT STOP - there is no tax max from Medicare taxes.
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