OUR THOUGHTS ON:

2013 Social Security Changes

Tax

By Thomas Lisak

Payroll tax cut ends. The temporary payroll tax cut which began in 2011 was allowed to expire at the end of 2012. Workers will now resume contributing 6.2% of their earnings in 2013, up from the 4.2% rate that was in effect during 2011 and 2012.

Higher wage base. Social Security tax must be paid (by both the employee and the employer) on the first $113,700 of wages in 2013. This is an increase of $3,600 over the 2012 wage base of $110,100.

More online services. Starting in 2012, workers could access their Social Security statements, including their earnings history, and check on their estimated benefits at various retirement ages. Additional online services available in 2013 include the ability to access a benefit verification letter and payment history, change addresses, and start or change direct-deposit of benefits information. For years, individuals have had the ability to apply for benefits online.

Paper checks will end. Most Social Security recipients (about 93%) already receive their benefits electronically. On March 1, 2013, the Treasury Department will stop mailing paper checks to Social Security recipients. Retirees will be required to choose to have their Social Security payments either directly deposited into a bank or credit union account or loaded onto a prepaid Direct Express Debit MasterCard. The debit card is primarily for benefit recipients who do not have a bank account.

Higher earnings limit. Beneficiaries between the ages 62 and 66 who are also working can earn up to $15,120 in 2013, after which $1 in benefits will be withheld for every $2 of earned income above the earnings limit. 

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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