Taxes

Social Security and Medicare Taxes

The Federal Insurance Contributions Act (FICA) provides for a federal system of old-age, survivors, disability, and hospital insurance.  The old-age survivors and disability insurance part is financed by the social security tax. The hospital insurance part is financed by the Medicare Tax.  Each of these taxes is reported separately.

Generally, you are required to withhold social security and Medicare taxes from your employees’ wages and you must also pay a matching amount of these taxes.  Certain types of wages and compensation are not subject to social security taxes. See Section 5 and 15 for details (2005 Circular E).  Generally, employee wages are subject to social security and Medicare taxes regardless of the employee’s age or whether he or she is receiving social security benefits.  If the employee reported tips, see section 6.

Tax rates and the social security wage base limit

Social security and Medicare taxes have different rates and only the social security tax has a wage base limit. The wage base limit is the maximum wage that is subject to the tax for the year.  Determine the amount of withholding for social security and Medicare taxes by multiplying each payment by the employee tax rate. There are no withholding allowances for social security and Medicare taxes.

2014 Tax Rates:

2014 FICA - The OASDI (Social Security) maximum wage base is $117,000.00, with a tax rate of 6.2%. The maximum withholding on Fica Social Security, employee portion is $7,254.00 for the period 1/1/2014 to 12/31/2014. The employee tax rate for social security is 6.2% (amount withheld). The employer tax rate for social security is 6.2%, (12.4% total). The HI (Medicare) tax rate remains unchanged at 1.45%, and is applicable to all wages earned.

The total OASDI (Social Security), and HI (Medicare Tax) combined total is 7.65% for both employee, and employer.

New Effective 2013:

Additional FICA Medicare Tax Withholding rate is 0.9%. Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year.

The individual components of FICA taxes are affected as follows:

• The OASDI (Social Security) maximum wage base is $117,000.00. With the tax rate of 6.2% the maximum payable will be $7,254.00, an increase from the 2013 maximum of $7,049.40. The payroll deduction will appear on your stub as Fica Social Security Tax.

• The HI (Medicare) tax rate remains at 1.45%, and is applicable to all wages earned. The payroll deduction will appear on your stub as Fica Health Insurance Tax.

• Additional FICA Employee Medicare rate of 0.90% to be taxed on employees who reach over $200,000 in earnings. The payroll deduction will appear on your stub as Fica Additional Medicare Tax.

2013 Rates - NEW

The employee tax rate for social security is 6.2% (amount withheld).  The employer tax rate for social security is 6.2% (12.4% total). The employee tax rate for Medicare is 1.45% (amount withheld).  The employer tax rate for Medicare tax is also 1.45% (2.9% total).  There is no wage base limit for Medicare tax; all covered wages are subject to Medicare Tax.

The 2012 wage base limit was $110,100.00.  The employee tax rate for social security was 4.2% (amount withheld).  The employer tax rate for social security was 6.2% (10.4% total). For 2012, the wage base limit was $110,100.00 for the period (01-01-2012 to 12-31-2012).  The employee tax rate for Medicare was 1.45% (amount withheld).  The employer tax rate for Medicare tax was also 1.45% (2.9% total).  There was no wage base limit for Medicare tax; all covered wages are subject to Medicare Tax.

Additional Medicare Tax Withholding

In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employer's Tax Guide.

Social Security Wage Base

The wage base for social security is adjusted each year and is shown below for ten years:

Year Annual Wage Base Tax Rate Maximum Social
Security Tax
 
2014 $117,000 6.2% $7,254.00  
*2013 $113,700 6.2% $7,049.40  
**2012 *$110,100 4.2% $4,624.20  
2011 $106,800 4.2% $4,485.60  
2010 $106,800 6.2% $6,621.60  
2009 $106,800 6.2% $6,621.60  
2008 $102,000 6.2% $6,324.00  
2007 $97,500 6.2% $6,045.00  
2006 $94,200 6.2% $5,840.40  
2005 $90,000 6.2% $5,580.00  

*For 2013,Additional Medicare Tax Withholding - In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in  excess of $200,000 in a calendar year.

**For 2012, the wage base limit was $110,100.00 for the period (01-01-2012 to 12-31-2012). The employee tax rate for social security was 4.2% (amount withheld).  The employer tax rate for social security was 6.2% (10.4% total)

Supplemental Taxation Rate Withholdings are as follows:

SUPPLEMENTAL RATES (AS OF 04/30/09)
Description Tax Rates
Federal 25%. . . . . . .(.25)
New York State 7.35% . . . . . (.0735)
NY City 4.00%  . . . . (.04)
Yonkers Resident 0 .735% . . . (.00735)
Yonkers Non-Resident 0.50% . . . .  (.0050)
       SUPPLEMENTAL RATES (EFFECTIVE 05/01/09)
Description Tax Rates
Federal 25%. . . . . . .(.25)
New York State 9.77% . . . . (.0977)
NY City 4.00%  . . . . (.04)
Yonkers Resident .977% . .  . .(.00977)
Yonkers Non-Resident 0.50% . . . .  (.0050)

 

SUPPLEMENTAL RATES (EFFECTIVE 05/01/11)
Description Tax Rates
Federal 25%. . . . . . .(.25)
New York State 9.77% . . . . (.0977)
NY City 4.00%  . . . . (.04)
Yonkers Resident 1.70975% . . (.0170975)
Yonkers Non-Resident 0.50% . . . .  (.0050)
       Last Updated 1/14
SUPPLEMENTAL RATES (EFFECTIVE 01/01/2012)
Description Tax Rates
Federal 25%. . . . . . .(.25)
New York State 9.62% . . . . (.0962)
NY City 4.25% . . . . (.0425)
Yonkers Resident 1.443% . . (.01443)
Yonkers Non-Resident 0.50% . . . .  (.0050)

If you need further guidance, please review Publication NYS-50-T-NYS (1/14) available at:

http://www.tax.ny.gov/pdf/publications/withholding/nys50_t_nys.pdf

If you need additional information on these changes please refer to the New York State tax website at http://www.tax.ny.gov/

If additional help is required, please contact the Payroll Department at 914-923-2898.

Helpful Links          
 www.socialsecurity.gov
 www.socialsecurity.gov/international

Policies & Procedures button   Please review our Policies and Procedures for additional information.
Finance Forms button Please review our Forms for additional information.