Thanks to Mom on Dealz for sharing her series, Ask an Accountant! Sharon is married to an experienced accountant. Although tax season is over, tax questions arise year round.
I read on Yahoo today that Social Security Tax is being raised. The article said that in 2012 the rate will go up to 12.4%, meaning 12.4% of a self employeed person’s income goes straight to Social Security Tax. Is this true?
Social Security tax has always been 12.4% except this past year because in 2011 the government gave a reprieve making the tax only 10.4%. Starting next year it will go back to 12.4% as its always been. However tax laws change a hundred times in the tax year so it could be less or more by the time tax season rolls around again. On another note, don’t forget Medicare will still be applied, so really self employed individuals will pay 15.3% (as its always been).
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.