Define: Social Security Tax

Social Security tax, also known as the Federal Insurance Contributions Act (FICA) tax, is a payroll tax that funds the Social Security program, which provides retirement, disability, and survivor benefits to eligible individuals.

Social Security tax is calculated as a percentage of an employee’s wages. As of 2021, the tax rate is 6.2% for both the employer and the employee, up to a certain income threshold.

In general, most employees are required to pay Social Security tax. However, certain groups, such as certain religious groups and nonresident aliens, may be exempt from paying this tax.

Yes, self-employed individuals are subject to Social Security tax through the Self-Employment Contributions Act (SECA) tax. They are responsible for paying both the employer and employee portions of the tax.

Yes, there is an annual income limit, known as the Social Security wage base, above which individuals do not have to pay Social Security tax. As of 2021, the wage base is $142,800.

If you overpaid Social Security tax, you may be eligible for a refund when you file your annual income tax return. However, it is important to consult with a tax professional for specific guidance based on your situation.

In general, individuals cannot opt out of paying Social Security tax. It is a mandatory tax that funds the Social Security program.

No, you cannot claim a tax credit for the Social Security tax paid on your personal income tax return. However, the tax paid may be used to calculate your Social Security benefits in the future.

Social Security tax is specifically designated to fund the Social Security program and cannot be used for other purposes unrelated to the program.

In general, to be eligible for Social Security benefits, you must have paid Social Security tax for a certain number of years. However, there are exceptions for certain individuals, such as spouses or dependents of eligible workers.