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Social Security Payments and Self Employment Income
Posted By Jim On 11/16/2006 @ 9:40 pm In Business,Government,Taxes | 10 Comments
Nickel and I were talking about the social security and he told me that you only have to pay on your first $94,200 of income , which was something we both knew already. For your typical employee, this calculation is very simple and done by your employer, you pay 6.2% of your salary up to $94,200 towards social security. Every dollar you earn after that will not be subjected to social security.
Now, all the literature on the social security website gives you a scenario where the $94,200 is entirely employee income, in which case the answers are cut and try: pay up to $5,840.40, after that you’re home free with respect to social security. They also give you the scenario where the $94,200 is entirely self-employment income, in which case you’re on the hook for both sides (employee and employer) to the tine of 12.4% or $11,680.80.
Now, what happens when you have a mixture of both? If I made $50,000 from my job and $50,000 from self-employment, is social security taken out from the job income and then the double-hit social security taken from the self-employment? Or you do you take the double-hit first from your self-employment? I can’t seem to find any literature on it so if anyone knows and can point me to something “official” I would truly appreciate it!
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 pay on your first $94,200 of income: http://www.fivecentnickel.com/2006/11/16/the-social-security-tax-ceiling/
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