Social Security Taxes: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

Social Security pays millions of Americans benefits that they rely on for making ends meet. But while many people understand the financial challenges that the program faces, they don't necessarily know how Social Security taxes work and how the program gets the revenue it needs to pay those benefits.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, takes a closer look at Social Security taxes, running through three essential aspects that everyone should know. Dan notes that payroll taxes provide the major source of income for Social Security, with employees paying 6.2% of their wages and employers matching that amount on their behalf. Self-employed workers have to pay both halves of the 12.4% total tax themselves. He then discusses the wage-base limit of $117,000 for 2014 and how it has nearly doubled in the past 20 years, and concludes with thoughts about how even deductions that reduce income-tax liability generally don't reduce the amount of Social Security taxes you have to pay.

Get smart about Social Security
You might not have much control over Social Security taxes, but the decisions you make about benefits can make a big difference to how much you receive from the program. 
In our brand-new free report, "Make Social Security Work Harder For You," our retirement experts give their insight on making the key decisions that will help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

The article Social Security Taxes: What You Need to Know originally appeared on

Fool contributor Dan Caplinger has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading