Social Security

[NickD 202]

This is from, "Your Social Security Benefits"

Whether employed by someone else or self employed, we all have to pay FICA taxes, either you have 6.2% deducted from your paycheck with your employer paying another 6.2% for a total of 12.4% plus another 1.45% times two or 2.9% for Medicare coverage for a total of 15.3%, if self employed you pay all of it.

For social security you only pay up to $102,000, that was around $80,000 last year, if you earn more, free of extra FICA taxes. So you can pay up to 12.4% of $102,000.00 or $12, 648.00 per year. There is no limit on Medicare, an extra 2.9%, but for now, let's just limit your gross income to $102,000 so a total of $15,606.00 is deducted from your gross pay, before other state and federal taxes, you only have $83,694.00 left.

But you don't pay taxes on this balance, you pay taxes on your gross income, therefore your FICA taxes are effectively post tax dollars, and if you do get benefits, any post tax benefits with the exemption of interest should be tax free. But not true, if you have other income besides your SS benefits, will have to include your SS benefits as your gross income. Well they do give you a 15% break on this, so you are effectively paying taxes on taxes.

Everybody with earned incomed pays FICA taxes, unearned income does not require paying these taxes with one example being capital gains. Capital gains is touchy in that if you run a store and buy a can of beans for 50 cents and sell it for 75 cents, that is not considered as capital gains, rather as gross profit from your business, better off to buy intangibles like stocks. Won't get into this, it gets messy explaining why the IRS has over 11,000 pages of regulations.

But from the above, you can easily see where SS is getting a big hunk of your paycheck and you pay whether here on a work visa, as a LPR, or as a USC, even as an illegal, but as these are deducted if working for an employer, but in the latter case difficult to tell exactly where that money is going.

Now for benefits.

For disability, to get any money, well for the same as benefits, you have to have credits, 29 credits for disability and 40 credits for benefits. Regardless of how much you earn, you can only receive 4 credits per year. You get one credit for each $1,050.00 you earn per year, and as long as you earn at least $4,200.00, you will receive the maximum number of credits, but get the same credits if you earn $102,000.00 per year. For disability payments you will have to earn at least $4,200 per year for 7.25 years and for benefits, have to work at least ten years. You have to be a USC to get disability benefits, if you are not, still paying for it.

For just the benefits, if you only get 39 credits, well forget about any benefits. So while you may have paid in over $150,000.00 in FICA taxes, you won't get a cent of it back. There are some exceptions to receiving benefits before you get the 40 credits, like dying. If you die and leave your spouse with a minor child, some small benefits will be made to both your spouse and child, but only until that child reaches 18 years of age, but if your children are over 18, your spouse will get $255.00 to bury you, not a very good return if you paid in over $150,000.00.

What they don't mention in the statement of benefits is they will be greatly reduced if say, you are 62 years of age, and your company is moved to China laying you off with no other jobs to be found, they use what they call income averaging for the last five years that can greatly decrease your benefits. Besides that, can be illness preventing you from working hard those last five years.

What this statement does say, is that the benefits can be changed anytime by congress, so don't plan on the future.

By Obama stating that SS benefits should not be taxed, well this is only fair, there are post tax dollars. If your FICA taxes were used to buy bonds with the current interest, one would be lucky enough just to get a fraction of that interest back especially after paying in for over 40 years. For staying alive to get those benefits, have to depend on Medicare, many medical institutions won't even touch a Medicare patient and coverages are highly limited for those that will.

Can only conclude that FICA is another form of tax, and anyone that says SS is going broke is a big fat liar. The numbers do not add up.

[Completely 3]

This is from, "Your Social Security Benefits"

Whether employed by someone else or self employed, we all have to pay FICA taxes, either you have 6.2% deducted from your paycheck with your employer paying another 6.2% for a total of 12.4% plus another 1.45% times two or 2.9% for Medicare coverage for a total of 15.3%, if self employed you pay all of it.

For social security you only pay up to $102,000, that was around $80,000 last year, if you earn more, free of extra FICA taxes. So you can pay up to 12.4% of $102,000.00 or $12, 648.00 per year. There is no limit on Medicare, an extra 2.9%, but for now, let's just limit your gross income to $102,000 so a total of $15,606.00 is deducted from your gross pay, before other state and federal taxes, you only have $83,694.00 left.

But you don't pay taxes on this balance, you pay taxes on your gross income, therefore your FICA taxes are effectively post tax dollars, and if you do get benefits, any post tax benefits with the exemption of interest should be tax free. But not true, if you have other income besides your SS benefits, will have to include your SS benefits as your gross income. Well they do give you a 15% break on this, so you are effectively paying taxes on taxes.

Everybody with earned incomed pays FICA taxes, unearned income does not require paying these taxes with one example being capital gains. Capital gains is touchy in that if you run a store and buy a can of beans for 50 cents and sell it for 75 cents, that is not considered as capital gains, rather as gross profit from your business, better off to buy intangibles like stocks. Won't get into this, it gets messy explaining why the IRS has over 11,000 pages of regulations.

But from the above, you can easily see where SS is getting a big hunk of your paycheck and you pay whether here on a work visa, as a LPR, or as a USC, even as an illegal, but as these are deducted if working for an employer, but in the latter case difficult to tell exactly where that money is going.

Now for benefits.

For disability, to get any money, well for the same as benefits, you have to have credits, 29 credits for disability and 40 credits for benefits. Regardless of how much you earn, you can only receive 4 credits per year. You get one credit for each $1,050.00 you earn per year, and as long as you earn at least $4,200.00, you will receive the maximum number of credits, but get the same credits if you earn $102,000.00 per year. For disability payments you will have to earn at least $4,200 per year for 7.25 years and for benefits, have to work at least ten years. You have to be a USC to get disability benefits, if you are not, still paying for it.

For just the benefits, if you only get 39 credits, well forget about any benefits. So while you may have paid in over $150,000.00 in FICA taxes, you won't get a cent of it back. There are some exceptions to receiving benefits before you get the 40 credits, like dying. If you die and leave your spouse with a minor child, some small benefits will be made to both your spouse and child, but only until that child reaches 18 years of age, but if your children are over 18, your spouse will get $255.00 to bury you, not a very good return if you paid in over $150,000.00.

What they don't mention in the statement of benefits is they will be greatly reduced if say, you are 62 years of age, and your company is moved to China laying you off with no other jobs to be found, they use what they call income averaging for the last five years that can greatly decrease your benefits. Besides that, can be illness preventing you from working hard those last five years.

What this statement does say, is that the benefits can be changed anytime by congress, so don't plan on the future.

By Obama stating that SS benefits should not be taxed, well this is only fair, there are post tax dollars. If your FICA taxes were used to buy bonds with the current interest, one would be lucky enough just to get a fraction of that interest back especially after paying in for over 40 years. For staying alive to get those benefits, have to depend on Medicare, many medical institutions won't even touch a Medicare patient and coverages are highly limited for those that will.

Can only conclude that FICA is another form of tax, and anyone that says SS is going broke is a big fat liar. The numbers do not add up.

great information Nick!

Edited October 23, 2008 by Completely