Discussion:SS tax credit & SE tax

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Discussion Forum Index --> Basic Tax Questions --> SS tax credit & SE tax


Discussion Forum Index --> Tax Questions --> SS tax credit & SE tax

Packbot (talk|edits) said:

18 December 2010
Does the new 2% social security tax credit also applies to SE tax? I would assume so but I haven't been able to confirm this.

Belle (talk|edits) said:

December 18, 2010
Yes, see this link for 24 page report on what passed.

[1]

Jctmstx (talk|edits) said:

18 December 2010
I believe it's a reduction in the actual tax withheld. It is not a tax credit as the Work for Pay.

Solomon (talk|edits) said:

18 December 2010
See Section 601(b)(1) of the enrolled version.

HR 4853

Belle (talk|edits) said:

December 18, 2010
True - the 2% 'holiday' isn't actually a credit. But it acts like one in that the overall 'tax' is reduced dollar for dollar.

It reduces the SS tax withheld from an employee's paycheck (on the EE side, not the ER side). And self-employed folks get the same benefit - the Sch SE computation will be 2% less.

Illini (talk|edits) said:

22 December 2010
Thanks Belle - I wondered if the ER side got a break too. That would be TOO much of a cut though, wouldn't it!

BerkshireCPA (talk|edits) said:

22 December 2010
I wonder if state and city workers not subject to FICA here in Massachusetts are going to complain and force congress to add a line on the 2011 tax return where they get relief. Right now a city cop married to a teacher probably forgo about a $3,000 savings (assume $75k each) and they lost the Make Work Pay Credit.

Cotopop (talk|edits) said:

23 December 2010
That's a good bet. Also I think there's a fair chance those on social security will be contacting their congressman for what they believe is their fair share (probably $250 per person).

Nightsnorkeler (talk|edits) said:

23 December 2010
But, but, he's getting a credit! I want mine too!!

EZTAX (talk|edits) said:

23 December 2010
Berkshire - I was thinking the same thing. Out here in California many teachers and other state and county workers do not pay into SS. It would not surprise me if the folks that wrote the laws had not considered this and will have to do something when they here from these taxpayers.

Belle (talk|edits) said:

December 23, 2010
Ummm - aren't those folks already getting a 'break' in that they were not paying the 6.2% in the first place?

Or am I missing something obvious?

BerkshireCPA (talk|edits) said:

23 December 2010
In Massachusetts, state workers could be paying in as much as 11% to the state retirement system and they are not eligible for social security benefits. Massachusetts is one of the states that if a spouse died who was receiving social security benefits, you may not get the spousal benefit (100% of spouse social security) because your state pension eliminates the benefit.

So these people have a legit gripe.

Joan TB (talk|edits) said:

5 January 2011
The way I see it, those government workers that have opted out of Social Security (and pay into their own retirement system) are already getting a break. The FICA tax that the rest of us pay is actually several parts. Social Security and Medicare are federal programs that provide benefits for retirees, the disabled, and children of deceased workers. Social Security benefits include old-age, survivors, and disability insurance (OASDI); Medicare provides hospital insurance benefits. So those who DON'T pay into Social Security are not helping to cover the cost of benefits to the disabled, the children of deceased workers, or old-age pensioners, whether or not they ever paid anything in. Now I don't mind helping out folks that need it. But how is it that a large segment of our working population can opt out of helping pay for these benefits for those folks, too?

That means that MY share has to cover THEIR share of the tax to provide those programs. Seems to me that having a government pension that only has to pay "MY" pension benefits (not benefits for other people) are getting a much better deal than I am. So I don't have a lot of sympathy. They wanted a separate program - they got one. Don't complain if now I get a price break on my program.

I am glad that the loophole where someone could work for a state agency all their working career, retire with full pension, and then work ONE DAY in a job that is subject to FICA could then get benefits from FICA. That one always really burned me big time.

CAcpa777 (talk|edits) said:

5 January 2011
Will as sole shareholder in an S Corporation be able to take advantage of the payroll tax holiday for self employed individuals?

Belle (talk|edits) said:

January 5, 2011
Shareholders in an S-corp do not pay 'self-employment tax'.

They pay into social security via their paychecks (assuming they perform work for the Corp). The 'employer' social security on the paychecks will stay at 6.2%; the 'employee' social security withheld will drop to the 4.2% for 2011.

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