SAN LUIS OBISPO COUNTY, Calif- Although lawmakers reached a fiscal cliff deal your paycheck will soon take a hit. The Social Security payroll tax funds Social Security through a 12.4 percent tax on your wages, split between you and your employer.
"Social Security tax is traditionally paid half by the employer and half by the employee, so if you're self employed your going to pay the whole thing," said CPA Jayme Phillips. Two years ago President Obama tried to cut people a break by enacting a temporary reduction to the amount of payroll taxes workers must pay to Social Security from their paychecks from 6.2 percent to 4.2 percent.
"For two years the employee had to pay 2 percent less into the social security system, employers still paid the same amount," said Phillips.
Now that the payroll tax wasn't part of the fiscal cliff deal, the amount you pay into Social Security will go back up to 6.2 percent. For example if you make 50-thousand a year you will pay an extra 1-thousand dollars more a year. "It's not a real visible tax, because you don't usually see the social security, you never get it back at the end of the year, it goes into the system, its one that kind of comes right off the top of your paycheck," said Phillips.
Employers have until mid February to begin taking out the added money from your paycheck.
Wednesday, May 22 2013 1:00 PM EDT2013-05-22 17:00:26 GMT
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