Tuesday, October 16, 2012

Social Security announces COLA benefit increase of 1.7% for 2013

The Social Security Administration has announced a 1.7% COLA (Cost of Living Adjustment) increase in benefit payments, to start in January 2013.

The basic link for the table is here

Since the average recipient receives about $1237 a month, the increase would typically be about $21.
But some of the increase will be consumed by an increase in Part B Medicare premiums, expected to be about $7 a month more.

The FICA tax rate 7.65% per employee, 7.65% to employer, of 15.30% total (which would be the self-employed rate).  And the FICA tax rollback of 2% probably won’t be continued.

Stephen Olemacher has an article in the Huffington Post, here. I’m not sure what he means by that “3.6%” increase number.  He also quotes a FICA  tax rate of 6.2%, but SSA says it is 7.65%.  The maximum wage base increases to $113,700.

I can remember as far back as 1975, when working for NBC in NYC and making $16,500 a year as a programmer, that we reached the Social Security cutoff around the end of September and had a “raise” for the rest of the year. 

Small Biz Tax Training has a video (Jan. 2012) explaining Social Security tax for self-employed individuals:

These rules can affect people forced to work as independent contractors by "employers", such as taxicab drivers and often home health caregivers.  

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