Q & A
There is a cap on how much of your income is subject to the Social Security tax. How much is that cap this year? Has there been any serious discussion lately about eliminating that cap and subjecting all income to Social Security taxes?
Full question: There is a cap on how much of your income is subject to the Social Security tax. How much is that cap this year? Has there been any serious discussion lately about eliminating that cap and subjecting all income to Social Security taxes? I’m almost afraid to ask this question because I don’t want to give Congress any ideas.
Answer: You are correct. There is a limit on the amount of earnings subject to Social Security’s “Old-Age, Survivors and Disability Insurance” program, often known as “OASDI” for short. For 2013, that limit is $113,700, up from $110,100 in 2012. The increase reflected changes in a national average wage index. For more details, see the Social Security Administration’s website (ssa.gov).
On your second question, the short answer is: Relax. Proposals to eliminate the cap, or increase it sharply, have little or no chance of becoming law any time soon. “All this must await progress on tax reform. It seems that will be long in coming,” says Clint Stretch, senior tax policy counsel at Tax Analysts. Read more.
Source: The Wall Street Journal (http://online.wsj.com), August 4, 2013
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