Reports are out that the amount of salary you will pay social security tax on will increase in 2012 by at least $3,500 to $110,300. This will affect small business owners by paying over $500 in additional tax in 2012.
FICA – The Federal Insurance Contributions Act imposes two taxes on employers, employees,and self-employed workers—one for Social Security tax, and the other for Medicare tax. The FICA tax rate for employees and employers is 7.65% each. For self-employed workers, the FICA tax is 15.3%. However, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduced the employee FICA tax by two percentage points to 4.2% for the total compensation that an employee receives during 2011. As a result, for 2011, employees will pay only 4.2% Social Security tax on wages up to $106,800, a savings of up to $2,136. The employer tax rate for Social Security remains unchanged at 6.2%.
The SSA intermediate forecasts through 2020 are as follows:
If you need help with your small business or are looking for an accountant in the Jacksonville, FL area, please don’t hesitate to contact us. Hagan CPA, Inc was founded in 2002 and has served small businesses and individuals with tax preparation, bookkeeping systems and strategic planning ever since.