The maximum earnings for 2019 is $132,900?

[chrisjchrisj]

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.

[GailL1]

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@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.

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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.

[fffred]

Yes, you are correct. Earnings above the FICA "ceiling" are not subject to those taxes. If you are on a payroll system for any good size of company then they likely will not withhold taxes on earnings once you hit the ceiling (that was the case for me, even at a small company).

If you have overpaid FICA taxes then these are credited to your Federal income taxes and any additional overpayment will be refunded to you.

In my opinion and experience, it's good to keep track of this through the year.

The flip side of this is that those additional earnings will not gain you any additional Social Security benefit.

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@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.

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[fffred]

A Google search gave me the Social Security Administration's page on this:   https://www.ssa.gov/oact/cola/cbb.html

There are tons of sites that describe and discuss this issue, for both 2019 and 2020.