Payroll News » Social Security

Social Security wage base rises to $106,800 for 2009

Ted — Fri, 17 Oct 2008 13:23:13 +0000

Social Security’s Old-Age, Survivors, and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation for a given year. The same annual limit also applies when those earnings are used in a benefit computation. This limit increases each year with increases in the national average wage index. We call this annual limit the contribution and benefit base. For earnings in 2009, this base is $106,800.

The OASDI tax rate for wages paid in 2009 is set by statute at 6.2 percent for employees and employers, each. Thus, an individual with wages equal to or larger than $106,800 would contribute $6,621.60 to the OASDI program in 2009, and his or her employer would contribute the same amount. The OASDI tax rate for self-employment income in 2009 is 12.4 percent.

Presidential candidates discuss merits of increasing the Social Security tax

Ted — Tue, 05 Aug 2008 13:13:14 +0000

With less than three months until the 2008 presidential election, both candidates have expressed their views about a possible Social Security tax increase. The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers — one for Old Age, Survivors and Disability Insurance (OASDI; commonly known as the Social Security tax), and the other for Hospital Insurance (HI; commonly known as the Medicare tax). The FICA tax rate for employees and employers is 7.65% each — 6.2% for OASDI and 1.45% for HI. There is a maximum amount of compensation subject to the OASDI tax (i.e., $102,000 in 2008), but no maximum for HI. Employers and employees will each pay a maximum OASDI tax of $6,324 in 2008.

Recently, Democratic Sen. Barack Obama (D-IL) called for higher Social Security taxes on wage earners making greater than $250,000 annually. The tax would not apply to wages between the current cap and $250,000. The Senator has not released any other specifics on how this tax would work but has stated that his plan would “allow us to extend the life of Social Security” without raising the retirement age or cutting benefits.

Sen. John McCain‘s (R-AZ) position on a Social Security tax increase is less clear. In an ABC interview on July 27th, McCain said that when it comes to fixing Social Security, “everything is on the table,” including a possible payroll tax increase. However, in a campaign speech after the ABC interview, McCain promised to fix the Social Security system without raising taxes.

Auto Update Your SSN Database.

Ted — Wed, 09 Jul 2008 14:16:13 +0000

Each month the SSA releases an updated list of Social Security Numbers that are newly issued as of that date. PayMaster uses this list to double check your input when you enter a new hire. If you get a message when entering a SSN , it could mean that its a newly issued number and your database is out of date. If you still get a warning of a invalid SSN after updating, you might double check your input or use the built in SSA Verification report that interfaces with the SSA’s online verification system like it.

Auto update is available now for this July change.
Just go to Utilities/Apply SQL Patches and then click on Internet/Check for SQL Updates.
It should download the patch called validSSN_July_2008.sql and then apply this patch to all companies.