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What are social security wages?

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Social Security wages refer to the income earned by an individual that is subject to Social Security taxes. These taxes are used to fund the Social Security program, which provides retirement, disability, and survivor benefits to eligible individuals.

How do social security wages work?

When an individual earns income from employment, a portion of their wages is withheld by the employer to pay Social Security taxes. Employees and employers in the U.S contribute to Social Security through FICA (Federal Insurance Contributions Act) taxes, which are used to fund the Social Security program.

What is the social security wage base?

The Social Security wage base is the maximum amount of an individual’s earnings subject to the Social Security portion of FICA taxes. This means that once an individual earns more than this amount, they do not have to pay Social Security taxes on any additional income. The Social Security wage base is adjusted annually for inflation and changes yearly.

What is included in social security wages?

Social Security wages generally include any income earned from employment, including:

  • Salaries, wages, bonuses, and commissions earned as an employee
  • Net earnings from self-employment
  • Tips (if they are reported to the employer)

What is excluded from social security wages?

Some examples of income that is excluded from Social Security wages include:

  • Investment income such as interest, dividends, and capital gains
  • Pensions, annuities, and retirement income from a government or employer-sponsored plan
  • Workers compensation benefits
  • Certain disability payments
  • Reimbursed business travel expenses
  • Certain disability payments

Who is subject to social security wages?

Generally, most workers in the United States are subject to Social Security taxes, and their wages are considered Social Security wages. This includes individuals who are employed by someone else and self-employed individuals.

However, some individuals may be exempt or partially exempt from Social Security taxes. These include:

  • Workers who are covered by a government pension plan, such as federal employees hired before 1984
  • State and local government employees who are covered by a public pension plan
  • Certain religious groups who have a conscientious objection to Social Security
  • Non-resident aliens who work in the US temporarily
  • Students and apprentices who are in a work-study program
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