The Social Security Administration has announced an increase in
the Social Security taxable wage base in 2013 from $110,100 to
$113,700. The $3,600 increase is slightly more than the $3,300
increase from 2011 to 2012. The cap was just $106,800 from 2009 to
2011, as inflation ground to a halt during the economic
The wage cap is the maximum amount of compensation subject to
tax under the Federal Insurance Contributions Act (FICA) for old
age, survivors and disability insurance (OASDI) — typically
called Social Security tax. FICA imposes both Medicare tax and
Social Security tax on compensation received for services at
matching employer and employee rates (with self-employed taxpayers
effectively paying both shares on self-employment income). Although
the Social Security tax is capped, the Medicare portion of FICA tax
applies to total earnings, with no limit on the amount.
The Social Security tax rate is generally 6.2% for both
employers and employees, but under a special temporary provision it
is only 4.2% for individuals in 2012. The rate is scheduled to
revert to 6.2% in 2013 without legislative action. The maximum
total individual share of Social Security tax is capped at
$4,624.20 in 2012 but is scheduled to jump to $7,049.40 in 2013,
with a return to the 6.2% rate and the higher wage cap.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The favoured tax status of foreigners planning not to stay in the UK on a long term basis (so called 'non-doms') became a hot topic in the run up to the UK General Election in May 2015, and one of George Osborne's early acts as Chancellor was to announce changes to the regime.
Many are aware that the principal income tax consequences of
expatriation are usually immediate – under the
‘mark-to-market' regime, a ‘covered
expatriate' is generally deemed to sell all of his property,
regardless of its location, on the day before he ceases to be
taxable as a US resident.
We hope you've enjoyed receiving our weekly Tax Policy Update. Our McGuireWoods Tax Policy Team is dedicated to providing our clients with up-to-the-minute information, unique insights, and detailed analysis of tax policy developments.
On November 2, 2015, President Obama signed the Bipartisan Budget Act of 2015 (the "Bill"), which repeals the TEFRA Unified Audit Procedures and replaces them with a radically modified "corporate" model for partnership tax audits.