Social Security Income Tax Limits for 2011

You may be wondering about Social Security income tax limits. Believe it or not, there is a concept to the word limit when it comes to taxation. For the tax year 2011, the Social Security income tax limit is $106,800.

What does that mean for you as an employer and what does it mean for your employees? The Social Security income tax limit means the employer does have a stopping point at which the employer has to pay in Social Security for the employee and it also means the employee has a stopping point at which Social Security is taken out of his or her paycheck.

Social Security for Employer and Employee

The employer is subject to the same Social Security tax rate and wage base limits as the employee. IRS Publication 15 is the Employer’s Tax Guide for the current wage limit for Social Security wages. Medicare tax is a whole different story. If you think there is a tax limit to Medicare tax, you’re wrong. There is not a limit to the Medicare tax.

Is Social Security Tax for Every Employee? Social Security Tax is not for every employee. You may find that surprising, but it’s true. Tribal council representatives are not taxed by Social Security or Medicare taxes. Here’s an interesting tax fact. Employees who have passed on are subject to Social Security and Medicare taxes for income paid to the beneficiary or estate in the same calendar year of the worker’s death. So, there is such a thing as taxes even after death. Death and taxes and taxes after death, who knew?

Does Age Matter or Do Social Security Benefits Matter?

What if you hire someone who is already collecting Social Security benefits? That is a good question and the answer is yes, you will pay Social Security tax on an employee even if they are past retirement age or if he or she is collecting Social Security benefits presently.

Social Security Income Tax Limits

You have discovered there really is a limit to Social Security taxation. Employers have their hands full and have a million items on their “to do” list. When it comes to being the boss, you have to weigh the time spent against the job completed.

For example, can you make more money working while you pay the landscaper to mow the lawn or does it actually save you money to mow the lawn yourself? Time is money.

Save yourself time by using QuickBooks for your business accounting tasks. QuickBooks tax accounting software will definitely save you a lot of time for other things like running your business. You enter basic information and you will be all set with Social Security and Medicare tax payments for your employees.

QuickBooks tax software will let you know when to pay and how to pay for all of your employee tax. Give QuickBooks Online Payroll a try today. You will be amazed at how simple paying taxes for employees has become!