As a followup to this morning’s post on the future of Social Security, I wanted to update you guys on the Social Security cap for 2010.
As you may or may not be aware, Social Security taxes are capped such that you only have to pay this tax (denoted FICA-OASDI on your paycheck) on your earned income up to a certain threshold.
In 2008, the cap kicked in at $102, 000 per individual. In 2009, the cap rose by $4, 800 to $106, 800. And now, in 2010, the cap remains unchanged at $106, 800. Hurray for a stagnant economy, huh?
This means that you’ll have to pay Social Security taxes on your first $106, 800 in earned income. Beyond that, your Social Security obligation will drop away, and you’ll only have to pay the Medicare portion of your FICA taxes.
13 Responses to “Social Security Taxes in 2010”
tHE ABOVE REQUEST IS CORRECT. REQUEST A COPY OF SSA-1099 FOR 2010.
The way I understand it, the argument for not removing the cap on social security is that the millionaires would receive bigger social security checks than they other wise would if the cap remained in place. Somehow this is bad? If a person only earns $10K annually, they going to get smaller social security checks than someone who earns 20K annually. Why shouldn’t the millionaires get more back in they pay more in. Besides, they only get more back if they live long enough to collect to begin with. Furthermore, if the number of millionaires is way smaller than the non-millionaires by a considerable amount, why should it matter that they get something more back commensurate with what they paid in? Finally, the argument that the millionaires will just divert taxable income to non-taxable income such as stock options will only happen if congress allows those options to remain non-taxable. I my opinion, making the rich pay the same percentage as the poor for the social programs is not unfair and not unheard of. They don’t get a break on the 1.45% medicare tax (sort of except for those pesky stock options which aren’t immediately taxed(if ever?)). The arguments against them paying their fair share don’t seem to hold water to me. I’m think all our social security taxes could be lower if the rich paid their fair share but maybe the should get a break on their Federal Income Tax. Why should the rich have to pay a bigger percentage for FIT if they aren;t going to continue to get a break on part of FICA like they currently do?
Once upon a time paying taxes was considered a priviledge….especialy during a war. I would gladly trade places and pay the same rate as I’m paying now, with the exception that I,d have to keep my values.
You and your buddy have the same job, same wage. Your buddy tries to work more hours to make more for whatever reason. Say he works 1.5x what you do. With no soc security cap, he pays 1.5x your taxes, has less free time and in the end gets the same benefits you do. Is that fair? How about we turn it in a different light, if you contribute less taxes because of a lesser salary or hours, then maybe you should work more hours until you reach the “cap” or equal to a certain minimum contribution that everyone else is putting since everyone gets the same.
The Social Security System is just another good example of who is running this country. Namely, the people with money who make the most money.
Remove the cap on contributions.I’m paying 6.2% of my salary. Roughly $4,500.00. My employer is paying the same amount. BUT, the people earning in the millions are only paying $6,621.60. Hardly fair, if you ask me.
Pro football player earning $14,000,000.00 a year pays $6,621.60. A CEO of a multinational corporation earns $67,000,000.00 a year and pays $6,621.60.
Do the math. And remember that their employer is subject to the same amount of SS taxes.
I am due to recieve social security next year. I have paid into it all my adult life. I served 29 years and 4months in the US Navy, and now I may not get to draw a dime. Here is the deal, they can say it is a tax all they want but by definition it is money paid into a retirement account. Every year I get a statement from the social security administration with my amount paid in and how much I can expect to draw. That is MY money. It is not a tax, it is not a slush fund for the government to draw from and it is not nor was it ever meant as a disability insurance fund for someone who has never paid into it. This whole thing is total BS. If congress (an extremely overpaid and underworked congress) were on the social system, I promise you it would be fixed. Fixed hell, it would never have gotten broke. This country is getting closer and closer to revolution. If the dummies trying to run it can’t see that then they deserve what they get. I say close the borders, arrest them all, and try them all for out right treason.
Oh yeah one other thing, Allen Keyes for president. How much worse could he be than what we have now? All that is missing from the president on down is the big red nose, floppy shoes and painted on smile.
I am glad there is a cap, in all honesty we forget that what makes America great is the fact that anyone can accomplish anything. so for instance if i work hard and achieve success why should i be punished by more in taxes? I will take that extra money and stimulate the economy buy making purchases and borrowing, etc. everyone wants the “rich” to pay more. Funny thing is what the government decares what “rich” is. It seems no one defines what that is. Loosely they throw around 250k, but in the eyes of the govt 80k+ is considered rich.
If there are penaltys for making money, lets just all make the same amount, in fact, lets all just do the same job, even better, lets have the government tell us what we can think, do, when we can use the bathroom, i am going on a tangent here….but in all honesty it is a slippery slope and narrows the path towards socialism
I hate taxes. I think the president should get rid of social security and medicare taxes so that people can keep that money in their pockets instead of having the government spend it for them. The government keeps wasting taxpayer money that’s why they have a $13.2 trillion credit card debt.
@ Melody – unless the person making $1M gets a SS benefit 10x bigger than the person who only made $100K, removing the cap is just another form of welfare. As mapinguari said, the income subject to SS is capped because the benefits are also capped.
There should be no cap. Social Security would be solvent if everyone paid on their entire income.
@BG: Keep in mind that the SS compensation in excess of the SS cap is not counted for purposes of calculating a person’s SS benefit. So the lady making $X bajillion will only be credited for $106,800, just like the “poor” guy who barely reaches the limit.
All parts of the tax-code that has drastic changes at specific dollar amount are crap. The SS-tax cap, the dollar amounts where you change brackets, the dollar amounts where you qualify/don’t qualify for various deductions and other things.
The SS-cap, in my opinion, is the worst cap and tax of all. This is the most regressive of all taxes: it is specifically targeted at the poor ONLY. If you earn $106k, you pay $13,243 in SS-taxes. If you make $X bajillion, you still only pay $13,243 in SS-taxes.
Then on-top of it all, the SS-tax surpluses ($3 trillion) were spent on non-SS related stuff: wars, wall street bailouts, and all the other stuff that you might not agree with that the federal gov spends money on. And to have talk about slashing retirees SS benefits after they’ve paid in a surplus — what a slap in the face.
I’m 33 years old, so I am not benefiting from SS yet — just paying the tax. If a bunch of pissed-off retirees want to revolt if their benefits are cut, I’ll be right there with them, because what is going on is highway robbery.
This is a subject that the personal finance blogging community has not written enough about — or at least I haven’t seen much about it. I realize that only a small portion of America earns enough to reach this cap, but for those who do the difference is pretty significant. I am fortunate enough to earn through the cap every year and the difference in paychecks once social security withholding stops is pretty significant.
I feel like there are probably some strategies to maximize a person’s after-tax income that could be worth identifying. For example, if in 2010 you earn through the cap, but have a variable income and doubt that you will do so again in 2011, there are probably some steps you could consider taking to take as much of your income in 2010 as possible.
Basically just a suggestion, I guess, to anyone who might be interested enough to think about or research or write about it…