Q & A
I’m receiving Social Security…do I still have to pay Social Security taxes?
Complete Question: I am 68 years old and I have been taking my Social Security benefit since I was 62. I’m not on disability or receiving any form of government “assistance”. The benefit payments I’m getting are based on my lifetime work history. But the monthly payments are not enough, so I decided to get a part-time job. Do I still have to pay Social Security taxes?
Answer: Yes, you do – Regardless of whether you are taking Social Security now or will be in the future, you have to continue to pay Social Security (and Medicare) taxes on your wages. This includes self-employment where you also have to pay the employer-portion of these taxes.
Keep in mind that this is not the same thing as income tax. The Social Security and Medicare tax is a total of 7.65% of your income (6.2% for Social Security and 1.45% for Medicare – assuming you are NOT self-employed). Depending on your total income, you may or may not have to pay income tax on your Social Security benefit.
There is one potential up-side to paying Social Security taxes now. Your benefit amount is based on your highest 35 years of earnings. If you earn more now than you did in any other year that was used to determine your benefit amount, your monthly benefit amount will increase. This is especially good if you had any years averaged in where you did not work at all. Any earnings are better than $0 when determining your earnings average. Just remember that previous years of earnings were indexed for inflation in order to calculate your current benefit amount.