Social Security Taxes: Are You Paying Too Much
2017 Basics: Social Security Withholdings
Not every Business Owner knows “All” or is aware of some of the details of their mistakes. Click to Continue for an introduction to key facts on Social Security and what you must do for your employees and how you can save yourself some money. 1
As a business owner, you're responsible for withholding certain federal taxes from your employees' wages. These include Federal Insurance Contributions Act taxes, or more commonly known as FICA taxes. 2
DID YOU KNOW: There's a cap on the wage amount for Social Security taxes, so that once an employee's wages exceed the capped amount, you're no longer obligated to pay the tax. In 2016, that amount was $118,500, but for 2017 you have to earn $127,200 to meet the maximum taxable earnings. There are other changes as well for the new year, so make it a New Year's Resolution to check with a qualified professional.
Social Security taxes include two parts: a portion that your employees pay, and a portion that your business pays. You're responsible for withholding 6.2 percent of your employees' gross wages from their check to pay into the Social Security fund, but you are also responsible for paying an additional 6.2 percent (the same amount) into the fund.
Social Security taxes are paid through quarterly payroll filings and ultimately through the Social Security Administration's website and reported on Form W-2 at the end of the year.
When it comes to Social Security payments, employers have several responsibilities.
- Report wages withheld for each employee on the W-2 form.
- File Form W-3 (Transmittal of Wage and Tax Statements).
- Confirm the accuracy of the employee's name and Social Security number. The information that you file on the W-2 form must match the employee's Social Security card exactly.
The good news is that all of these steps can be easily completed online. The Social Security Administration offers free filing of W-2 forms, free Social Security information verification and more.
Other Important Social Security Facts to Know
The Social Security Administration also offers additional services to employers on its website. Employers can use the SSA site to verify Social Security numbers as well as names for individuals. This is a valuable service for identifying potentially fraudulent identification, undocumented aliens posing as legal residents and other identification issues that could cause legal headaches for your business later on.
Keep Accurate Records
All of the money that you withhold for Social Security taxes must be paid to the fund timely, so be sure to keep detailed records of all employee information, salary information, hours worked, and anything that impacts their wage history and employment. A simple record-keeping program or accounting program can help you maintain the detailed records that will make W-2 filings much easier for small to midsize businesses.
If you have questions about any of the requirements, give us a call at Morris+D'Angelo. We're happy to discuss how Social Security rules apply to your particular business and how we can help you stay ahead and on track with your Business Goals.
No Replies to "Social Security Taxes: Are You Paying Too Much"
This site uses Akismet to reduce spam. Learn how your comment data is processed.