  PO Box 2214 Oregon City OR 97045 503-656-0699 |
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Date last modified: 10/29/07 |
Social Security The Social Security 2007 wage base is $97,500, meaning Social Security tax is assessed on all wages up to this amount. The Medicare tax is assessed on all wages. The tax rates remain the same – FICA (Social Security) is 6.2%; 1.45% for Medicare. Both employers and employee pay this tax. Self-employed people pick up the full 15.3%. In 2007, Social Security considers full retirement age to be 65 years plus 10 months. In 2008, the full retirement age will be 66 years. Note that the full retirement age is creeping up. See the chart below to determine the age when you will be eligible to collect 100% of your Social Security benefit. Social Security recipients younger than the full retirement age can earn up to $12,960 in 2007. For every $2 in earnings over that amount, benefits are reduced $1. Retiree reaching full retirement age in 2007 can earn up to $34,440 during 2007 prior to reaching full retirement age. One dollar in benefits will be withheld for every $3 in earnings over the limit. When the full retirement age is reached, there is no limit on earnings. Up to 85% of your Social Security benefits could be subject to Federal Income Tax, depending on your total income. Oregon does not tax Social Security. You may want to check other state laws for their tax treatment. Social Security recipients can opt to have tax withheld from their Social Security checks. The form to use is a W4-V. Social Security mails an annual statement explaining your eligibility and projected benefit amount. Contact us if you would like more information and an analysis of how Social Security might affect your retirement planning. There is a modest fee for this service.
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