2013 Social Security Changes
The Cost-of-Living Adjustment for 2013 will be 1.7%. This means that social security recipients will receive a 1.7% raise beginning in January.
The wage base that is subject to FICA taxes will increase from $110,100 to $113,700. Therefore, the maximum amount of FICA tax will be $7,049.40 for the employee and employer or $14,098.80 combined.
A quarter of coverage will be based upon $1,160 of earnings.
People who retire at less than full retirement age will be allowed to earn $15,120 per year ($1,260 per month) up from $14,640 in 2012. $1 is withheld for every $2 in earnings above the limit.
In the year of attaining full retirement, the amount increases to $3,340 per month for each month before retirement age that they can earn. Once they reach full retirement, they can have unlimited earnings without penalty.
Remember that the Medicare surtax on earnings in excess of $200/$250,000 per year will apply beginning January 1, 2013. Therefore, the Medicare tax on earnings in excess of those amounts will be 3.8% instead of the current 2.9% combined rate.
Paul Neiffer, CPA
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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