Workers and their employers both pay Social Security tax. As of 2011, the tax is 10.4 percent per pay, with the worker contributing 4.2 percent and the employer paying 6.2 percent. Independent contractors and the self-employed are responsible for the entire 10.4 percent due to the government. The government levies these taxes on the first $106,800 of earnings in a calendar year.
Wage earners are responsible for paying 4.2 percent of earned income up to $106,800 as of 2011. The most a wage earner will pay in 2011 for Social Security is $4,485.60. Any wages earned over $106,800 are not subject to Social Security tax. Prior to 2011, wage earners were responsible for 6.2 percent of earned income. In 2010, a wage earner would have been responsible for $6,621.60 if they made $106,800 or more in wages.
Independent contractors are responsible for paying the full 10.4 percent of earned income up to $106,800 as of 2011. The most an independent contractor will pay in 2011 for Social Security is $11,107.20. Prior to 2011, independent contractors were responsible for the full 12.4 percent of earned income. In 2010, an independent contractor would have been responsible for $13,243.20 if they made $106,800 or more in wages.
Social Security Statement
You can generally qualify for Social Security benefits if you have earned 40 credits and have reached age 62. If disabled, you might qualify for benefits at an earlier age. You can earn up to four credits per year and receive one credit for each $1,000 earned. The Social Security Administration sends statements to people who have paid into the system each year starting at age 25. The statement lists benefits the person and his family may qualify for and when that person may be eligible. The Social Security Administration will also send you a statement of your account at your request. Visit the Social Security website and request a statement online or download form SSA-7004 from the Social Security website and send it to the address on the form.
You may begin to receive benefits at age 62 and must begin to receive them by age 70. The longer you wait, the bigger the monthly benefit you will receive. Those born in 1935 and before were eligible to receive full benefits at age 65. Those born on or after 1960 will not be eligible to receive benefits until age 67. Those born between 1935 and 1960 will have their age of full benefit eligibility increase regularly from age 65 to 67 based on their year of birth. A person born in 1960 who decides to receive benefits at age 62 will forfeit 30 percent of the potential monthly benefit she would have received if waiting until age 67. In this example, someone who would have received $1,000 per month by waiting to get benefits until 67 would only receive $700 per month if they begin to receive benefits at age 62 when they first become eligible.