FICA Wage Base Remains at $118,500
The Social Security Administration has revealed that the Accounting FICA wage base taxable wages in 2016 will remain at $118,500. The maximum tax amount is $7,347 with 6.2% social security tax being paid by both employees and employers.
Excluding pretax medical and tax free fringe benefits wages will also be subject to a 1.45% Medicare portion of the FICA or a 2.35% Medicare portion of the FICA if employees earn more than $200,000 annually.
Those who are retired, but want to go back to work as a reliable resource have exempt amounts, since they know how things work already. These calculations can all be outsourced to payroll companies out there. However, when going back to work it is possible for some of their Social Security benefits to be cut. The amount that is cut depends on how they score on the earnings test. Usually, it is less than the amount feared though.
Those who are retired and are between ages of 65 and 67 will have to take a modified earnings test, which only is applicable for earnings for the months before that birthday. The wages earned after that birthday won’t affect their taxable Social Security benefits. In 2016, the exempt amount is $41,880 annually and $3,490 per month. This calculates to $1 in benefits lost for each $3 in wages.
Those who retired early will be subject to undergo a separate earnings test. If they retired before retirement age and went back to work they can earn up to $15,720 annually or $1,310 monthly without affecting their benefits. Early retirees lose $1 in benefits for every $2 in wages.