Tax and Insurance
September 15th, 2020
A Better Understanding to Your Social Security Tax
Social Security tax can be a bit hard to understand for those both employed and self-employed. For those younger in the workforce, you are also a bit skeptical you will even receive these benefits which makes it a bit harder to see your hard-earned money going to the program.
Social Security tax is a tax that workers pay on a percentage of their wages and is used to fund the Social Security program. All employers, employees, and self-employed individuals are required by law to contribute to pay this tax that contributes to the Social Security program. This tax is split in two ways. Half of the tax is paid by the employer and the other half by the employee.
In the case of the self-employed individual, they end up paying both sides of the tax. Fortunately only on wages up to a certain amount. This amount changes year to year by the government, based on the current inflation rate.
Where does all this money go? Well, this tax funds the Social Security program which pays a monthly income to retired and disabled individuals, as well to their surviving spouses.