Employer Obligations Under Social Security (and Upcoming Changes)


    Social Security is an important supplemental income that most Americans rely on in their older age. Both workers and employers pay into the system, so it can be used to support both retirees and seniors that are still working when they reach the eligible aid to begin claiming Social Security benefits.

    Employers have a specific set of obligations when it comes to paying their share of social security – it’s a key component of an employer’s federal payroll tax responsibilities under the Federal Insurance Contributions Act (FICA). Here’s what you need to know as a small business owner about your FICA tax obligations and, specifically, Social Security.

    FICA doesn’t simply prescribe tax obligations that support social security, but also Medicare. Both workers and employers share these costs to guarantee supplemental income and health coverage in old age. FICA taxes include the withholding of employee compensation, as well as the payment of an employer’s portion.

    Employee compensation withholding:

    • 6.2 percent Social Security tax
    • 1.45 percent Medicare tax
    • 0.9 percent Medicare surtax on employees earning more than $200,000

    Employer obligations:

    • 6.2 percent Social Security tax
    • 1.45 percent Medicare tax

    “In addition to the payroll tax obligation, employers are required to report wages for each employee from whom income, Social Security and Medicare taxes are withheld, on Form W-2,” Bill Goselin, compliance analyst for Paychex, told Business News Daily. “If an employer files more than 250 W-2s, they must be filed electronically. These must be filed with the SSA by January 31 of the following year.”

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    Read more: https://www.businessnewsdaily.com/10977-social-security-rules-for-business.html


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