This calculation is included in Divorce Math for customers who do not subscribe to the full Divorce Planner software application.
Example. If an individual has two jobs - one salaried and the second a self-employment job from the home, the Social Security tax calculation is quite complicated.
The Social Security Wage base is set at the 2007 level of $97,500. Change this figure and the year if the calculation is for a different year.
Note: Divorce Math may be used over several years with no update cost. Social Security tax variable for wage base is changed each year.
Tax rates for salaried and self-employed may also be changed, but these rates would only be changed if new legislation is passed changing the tax structure of Social Security. Social Security taxes are different depending on whether the individual is self-employed or salaried. The Social Security self-employment tax rate is twice the rate of salaried individuals, but 1/2 of the Social Security self-employment tax is deductible as part of the federal income tax.
The Social Security tax is composed of the basic FICA tax (6.2% for salaried and 12.4% for self- employed) on income up to the Social Security Wage base and the Medicare tax (1.45% for salaried and 2.9% for self-employed) on all income subject to Social Security taxes. Some income is not taxed for Social Security purposes. Cafeteria plan deductions for health insurance premiums and child care expenses are not subject to Social Security taxes.
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