Most Americans rely on social security to provide at least some of their income in retirement. As such, it’s important to understand how social security works. 

Hal Surratt CPA in Archdale, NC, reveals three facts you should know about social security:

• You’ve Been Paying Into The Social Security System All Along: If you are employed, you pay into the social security system with every paycheck. 6.2% of your wages are withheld for the social security tax. Your employer also pays 6.2% of your wages into the system. If you are self-employed, you pay 12.4% of your wages, since you are both the employer and the employee. Social security tax is due on the first $118,500 of wages as of 2016.
• Your Social Security Benefit May Be Taxable: If you have other income, including investment interest income or income from a part-time job, it could cause your social security income to be subject to income tax. Up to 85% of your social security income could be taxed if you earn income from other sources. If you think you’ll be subject to income taxes, having taxes withheld from your monthly benefit payment is a good way to avoid a surprise at tax time.
• You May Be Eligible For Social Security Even If You Never Worked: Non-working spouses aged 62 and older can receive a spousal benefit as long as the working spouse is receiving benefits. The spousal benefit is equal to half of the benefit the working spouse is eligible for. Even if you’re divorced, you can collect a spousal benefit on your ex-spouse’s earning record, provided you were married for at least ten years, have been divorced for at least two years, and have not remarried.

Social security provides an important safety net for retirees, but it can be complicated. A CPA who is well-versed in tax planning can give you advice that may increase your benefit or help you save on taxes. Accountant Hal Surratt CPA provides tax preparation, business consulting, payroll services, and more for individual and business clients in the High Point, NC, area. For more information, visit the website or call (336) 861-4024 to make an appointment.