Get Ready to Pay an Extra $595 of FICA tax
The Social Security Administration just announced that the wage base will be increasing from $132,900 to $137,700 or an increase of $4,800. The FICA tax rate for self-employed farmers is 12.4%.
Therefore, farmers who exceed this wage base in 2020 will see a FICA tax increase of $595.20 ($4,800 times 12.4%).
Remember, there is already chatter in Congress about creating an extra wage base on all earned income in excess of $400,000 and we have seen reports that the wage base may easily exceed $200,000 in ten years.
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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