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How To Get Social Security Tax Form

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What Happens When Youre Self

Tax Forms and Social Security Answers

When you’re self-employed, youre considered both the employee and the employer. This means its your responsibility to withhold Social Security from your earnings, contributing the employers matching portion of Social Security and the individuals portion. Instead of withholding Social Security taxes from each paycheckmany self-employed people dont get regular paychecks, after allyou pay all the Social Security taxes on your earnings when you file your annual federal income tax return. This amounts to both your personal contribution and your businesss contribution.

IRS Schedule SE: Self-Employment Tax is where you report your businesss net profit or loss as calculated on Schedule C. The federal government uses this information to calculate the Social Security benefits youll be entitled to later on down the road. Self-employment tax consists of both the employee and employer portion of Social Security and the employee and employer portion of Medicare , which makes the total self-employment tax rate 15.3%.

It may seem like youre getting the short end of the stick because you have to pay both the employee and the employer portion of the tax, but that isn’t necessarily true.

If you are self-employed and earned $400 or less, you wont owe Social Security taxes.

Example Of Social Security Taxation:

Let’s say a single, 68-year-old retired woman, Susan, receives the average Social Security benefit, totaling $18,516 for the year.

Susan collected $30,000 from other means throughout the year, so her provisional income is $39,258 .

Then, 85% of Susan’s total Social Security benefit, $15,738, is subject to federal income tax.

Every January, the Social Security Administration sends an earnings statement to Social Security recipients Form SSA-1099 showing the amount they were paid in benefits throughout the tax year. The statement is used to fill out their federal income tax return, which will determine whether tax is owed on Social Security benefits. Some states also tax Social Security benefits.

If Social Security recipients anticipate they’ll need to pay federal taxes on their benefit and want to do it ahead of time, they can make estimated quarterly payments or elect to have federal taxes withheld either 7%, 10%, 12%, or 22% of their monthly benefit.

Who Is Exempt From Paying Social Security Tax


Most people can’t avoid paying Social Security taxes on their employment and self-employment income. There are, however, exemptions available to specific groups of taxpayers.

Just like the income tax, most people cant avoid paying Social Security taxes on their employment and self-employment income. There are, however, exemptions available to specific groups of taxpayers. If you fall under one of these categories, you can potentially save a significant amount of money. However, if you do take advantage of the exemption, you will be ineligible to receive any of the benefits offered by Social Security.

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How Minimizing Taxes Minimizes Benefits

There are many business expenses that can reduce your tax liability besides the Social Security tax deductions you can take when youre self-employed.

Business expenses reduce your overall tax, which ultimately lowers your Social Security taxes. Business tax deductions are a way of minimizing self-employment tax and Social Security taxes, says Carlos Dias Jr., founder and managing partner of Dias Wealth LLC in Lake Mary, Fla.

But keep in mind that this can work against you when it comes to Social Security benefit calculations, which are based in part on your taxable earnings. Here’s why. The more deductions you have, the lower your Schedule C income. Lowering your Schedule C income is a good way to reduce how much federal, state, and local income tax you owe. However, this lower amount becomes part of your Social Security earnings history and means you may receive lower benefits in retirement than if you didnt take those deductions.

You Still Have To Pay Into The System

Ssa 1099

      InvestopediaForbes AdvisorThe Motley Fool, CredibleInsider

        When you work for someone else, that employer takes Social Security taxes out of your paycheck and sends the money to the Internal Revenue Service . But things work a little differently for people who are self-employed. If you fall into this category, keep reading. This article will help you understand how to calculate the Social Security taxes you owe.

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        How To Get A Social Security Card

      • Gather your documents. Learn what documents you’ll need to get a card. Select your situation:
      • Adult or child
      • Original, replacement, or corrected card
      • U.S. born citizen, foreign born U.S. citizen, or noncitizen
      • Apply online for a replacement card. Apply online if youre not changing anything on your card and you are eligible. This option is available in most states. You will need to make a my Social Security account first. Or complete an application. If you can not apply online, fill out an application and return it to the SSA. Find out where to take it in person or mail it.
      • How To File Social Security Income On Your Federal Taxes

        Once you calculate the amount of your taxable Social Security income, you will need to enter that amount on your income tax form. Luckily, this part is easy. First, find the total amount of your benefits. This will be in box 3 of your Form SSA-1099. Then, on Form 1040, you will write the total amount of your Social Security benefits on line 5a and the taxable amount on line 5b.

        Note that if you are filing or amending a tax return for the 2017 tax year or earlier, you will need to file with either Form 1040-A or 1040. The 2017 1040-EZ did not allow you to report Social Security income.

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        Qualifying For Social Security Benefits

        Anyone born in 1929 or later needs 40 Social Security work credits, the equivalent of 10 years of work, to qualify for Social Security benefits. For every quarter that you earn at least $1,470 in 2021 , you earn one credit. The number changes annually.

        Even if your business isnt particularly successful, or you only work part-time or occasionally, its not difficult to earn the Social Security credits you need. In fact, even if your earnings fall below this threshold or if your business has a loss, there are some alternative ways to earn Social Security credits. These optional methods may increase the amount of self-employment tax you owe, but theyll help you get the work credits you need.

        Your eventual benefit payments do take your earnings into account. If you never earned much money from a lifetime of self-employment, dont count on getting a large Social Security check in retirement. If you started claiming benefits this year, for example, and your average monthly earnings worked out to just $800, your monthly Social Security retirement benefit would be $720assuming youre at full retirement age. Thats not much, but if you managed to get by on an average of $800 a month during your working years, you could probably work with a monthly benefit payment of $720 in retirement.

        Withholding Income Tax From Your Social Security Benefits

        How to enter a 1099-SSA (Social Security)

        You can ask us to withhold federal taxes from your Social Security benefit payment when you first apply.

        If you are already receiving benefits or if you want to change or stop your withholding, you’ll need a Form W-4V from the Internal Revenue Service .

        You can or call the IRS toll-free at 1-800-829-3676 and ask for Form W-4V, Voluntary Withholding Request.

        When you complete the form, you will need to select the percentage of your monthly benefit amount you want withheld. You can have 7, 10, 12 or 22 percent of your monthly benefit withheld for taxes.

        Only these percentages can be withheld. Flat dollar amounts are not accepted.

        Sign the form and return it to your local Social Security office by mail or in person.

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        Tips For Saving On Taxes In Retirement

        • A financial advisor can help you align your tax strategy to maximize your retirement income. SmartAssets free tool matches you with financial advisors in your area in 5 minutes. If youre ready to be matched with local advisors who can help you achieve your financial goals, get started now.
        • What you pay in taxes during your retirement will depend on how retirement friendly your state is. So if you want to decrease tax bite, consider moving to a state with fewer taxes that affect retirees.
        • Another way to save in retirement is to downsize your home. Moving into a smaller home could lower your property taxes and it could also lower your other housing costs.

        Earn Ssa Work Credits In Some Countries

        You may not have enough credits from your work in the United States to qualify for retirement benefits. But, you may be able to count your work credits from another country. The SSA has agreements with 24 countries. If you earned credits in one of those countries, they can help you qualify for U.S. benefits.

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        Understanding Social Security Taxes

        If you work for someone else, Social Security taxes are deducted from your paycheck. The Social Security tax rate for 2021 is 6.2%, plus 1.45% for the Medicare tax. So, if your annual salary is $50,000, the amount that will go to Social Security over the course of the year is $3,100, plus $725, for a total of $3,825.

        Your employer will match an additional $3,825 over the course of the year, and it will also report your Social Security wages to the government. When you retire or if you become disabled, the government uses your history of Social Security wages and tax credits to calculate the benefit payments youll receive.

        Social Security And Medicare Withholding Rates

        2019 Form SSA

        The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. Refer to Publication 15, , Employer’s Tax Guide for more information or Publication 51, , Agricultural Employers Tax Guide for agricultural employers. Refer to Notice 2020-65 and Notice 2021-11 for information allowing employers to defer withholding and payment of the employee’s share of Social Security taxes of certain employees.

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        Get Ssa Benefits While Living Overseas

        U.S. citizens can travel to or live in most, but not all, foreign countries and still receive their Social Security benefits. You can find out if you can receive benefits overseas by using the Social Security Administrations payment verification tool. Once you access the tool, pick the country you’re visiting or living in from the drop-down menu options.

        What Is A Social Security Benefit Statement

        A Social Security 1099 or 1042S Benefit Statement, also called an SSA-1099 or SSA-1042S, is a tax form that shows the total amount of benefits you received from Social Security in the previous year. It is mailed out each January to people who receive benefits and tells you how much Social Security income to report to the IRS on your tax return.

        • Noncitizens who live outside of the United States receive the SSA-1042S instead of the SSA-1099.
        • The forms SSA-1099 and SSA-1042S are not available for people who receive Supplemental Security Income .
        • A replacement SSA-1099 or SSA-1042S is typically available for the previous tax year after February 1.
        • If you dont have access to a printer, you can save the document on your computer or laptop and email it.

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        How Much Control Do You Want

        As we dont know what Social Security benefit payments will look like in the futuremany people expect them to be lower because of how the system is fundedyou may want to go with the sure thing and take the lower tax liability today. After all, one way to lower your tax liability is to take money out of your business and put it in one of the available retirement plans for the self-employed. Thats money youll have a lot more control over than Social Security benefits.

        “The great thing about Social Security is you cannot access it until retirement age,” says Kevin Michels, CFP, EA, financial planner and president of Medicus Wealth Planning.

        “You cant make early withdrawals, you cant skip payments, and you are guaranteed a benefit,” Michels adds. “However, you have only a small say in the future legislation of Social Security and how it will be affected by the mismanagement of government funds.”

        Michels continues to say the following:

        If you have trouble saving for retirement already, then paying into Social Security may be the better option. If you are confident you can stick to a savings plan, invest wisely, and not touch your savings until retirement, it may be a better idea to minimize what you pay into Social Security and take more responsibility for your retirement.

        State Taxes On Social Security Benefits

        Stop Social Security Tax Withholding Medicare FICA from Paycheck

        Everything weve discussed above is about your federal income taxes. Depending on where you live, you may also have to pay state income taxes.

        There are 13 states that collect taxes on at least some Social Security income. Four of those states follow the same taxation rules as the federal government. So if you live in one of those four states then you will pay the states regular income tax rates on all of your taxable benefits .

        The other nine states also follow the federal rules but offer deductions or exemptions based on your age or income. So in those nine states, you likely wont pay tax on the full taxable amount.

        The other 37 states do not tax Social Security income.

        State Taxes on Social Security Benefits
        Taxed According to Federal RulesMinnesota, North Dakota, Vermont, West Virginia
        Partially TaxedColorado, Connecticut, Kansas, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah
        No State Tax on Social Security BenefitsAlabama, Alaska, Arizona, Arkansas, California, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming

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        Individual Taxpayer Id Number

        An Individual Taxpayer ID Number may be required for individuals who do not have employment authorization and are not eligible for an SSN. ITINs are issued only for the purpose of federal tax reporting. Nonresidents filing an income tax return may need an ITIN.

        An ITIN is not required to complete a Form 8843.

        An ITIN does not entitle the recipient to Social Security benefits, indicate immigration status, or guarantee/certify the right to work in the U.S.

        In order to receive an ITIN you must complete Form W-7 with the IRS. Visit the IRS website to learn more about ITINs.

        The tax preparation software provided for international scholars will automatically generate Form W-7 for nonresident aliens who require ITINs for their dependents in order to claim them on their tax returns.

        Once you have completed the documents, you can make an appointment at the IRS Taxpayer Assistance Center to submit your application along with your proof of identity and foreign status documents.

        The content in this website is provided for informational purposes only. MIT does not offer legal, accounting, or tax advice and services. This information should not be used as a substitute for consultation with a professional accounting, tax, or legal advisor. MIT recommends that students consult a tax advisor for individual tax advice.

        If You’re Not Sure Why You Received A Payment

        Contact the authorizing agency directly to find out why they sent the payment. You may be able to find the authorizing agency in the memo line of the check. View this diagram of a sample Treasury check to help you locate the authorizing agency contact information on your own check. Scroll about half way down the page to see the diagram.

        If you’re unable to find which agency authorized the payment, . They can help you determine which government agency you need to contact. To find which RFC you need to call, look for its city and state at the top center of the check.

        Use the Treasury Check Verification System to verify that the check is legitmate and issued by the government.

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        An Exempt Taxpayer Example

        Consider this example. An international student in a master’s program in the U.S. is on optional practical training from August of 2018 through August of 2019. The student shouldn’t be subject to FICA taxes, which were withheld because the employer didn’t realize this.

        The student is in the U.S. on an F-1 visa and has never worked without Immigration and Naturalization Service authorization under a student visa. The student should be able to file for a Social Security and Medicare tax refund to recapture the taxes that were mistakenly withheld.

        The Future Of Social Security Isn’t Clear

        Form SS

        Social Security isn’t in great shape, on the whole. According to a 2019 report from the trustees of Social Security and Medicare, the federal program that pays out retirement and disability benefits to millions of Americans was expected to be in the red in 2020 and “all later years,” paying out more than it’s collecting in funding. And that was before the coronavirus pandemic hit and mass unemployment befell America.

        Every working American pays into the Social Security and Medicare systems through a 7.65% payroll tax, or a 15.3% tax if self-employed, which covers both the employee and the employer portions. That tax is levied on the first $142,800 of a worker’s income in 2021, up from $137,700 in 2020.

        Taxes being paid by workers at present aren’t saved for their own future retirement. Instead, they go toward funding Social Security benefits for the currently disabled or retired, as well as retirees’ spouses and dependents, and surviving dependents and spouses. As Darren Fonda

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