Social Security Gotcha
 

Just got the email from the company about the little gem Congress buried in the 2% payroll tax cut extension. Seems those of us with a little senority who are doing well will have to pay a 2% income surtax in 2013 on any money above the threshold that was earned in January and February of this year. So, bottom line, better tuck that 2% "pay raise" away because they are coming after it next year. Did anybody know about this?

here's another question....

Say assuming the rate goes back to 6.2% in March thatyou still end up max'ing out Social Security so you paid $6826.2 for the year (I believe they changed the with-holding RATE from 6.2 to 4.2% in Jan-Feb but never altered the maximum with-holding AMOUNT for 2012), do you still have to pay EVEN MORE and give them the 2% you earned in Jan-Feb?

I think there was a cap mentioned in the email. So it looks like if the rate does go back to 6.2%, you won't get double billed. Anyway you slice it, there is no payroll tax cut for the majority of FedEx pilots. You are going to pay either 4.2% or 6.2% beginning in March until you hit the cap ($110,100) for this year and then you will pay a 2% surtax on the money you earned in Jan. and Feb. My bet is that if they extend the tax cut, the surcharge will stay on all money earned up to the cap. You will pay $6826 one way or the other. I guess the silver lining is you get to use their money for a year until they make you pay it back. Looks like lots and lots of trips to Goodwill this year!!

87% of 2008 ALPAPAC money supported politicians who support this. Wait till they go after the $110K cap.

I am so glad we have a "Labor Friendly" administration in power.

Actually my read on this is that they did go after the cap for two months. If you make more than two months worth of the cap, then THAT money will be taxed at 2%, anything under the cap will be taxed at 4.2%. Doing it for only two months confuses the issue which is probably why they did it. If it becomes this way for the year, then look what happens. If you do the math, someone making 110,000/year payed 6.2% before (paying 6820 in social security tax). Now they pay 4.2% or $4620 ....an $1800 decrease. If you make 110,001, then the first $110,000 is payed at 4.2% and the last dollar is payed at 2%. So you pay $4620.02.

If you make $200,000 a year (the magical number for being "rich" according to the Marxist in Chief) then you will pay 4.2% on everything under $110,000 and 2% on everything over.....so the extra $90,000 above the "cap" is taxed at 2% for an increase of .....wait on it....wait on it....$1800.

So if you make exactly $200.000 you will pay 6.2%......which is an increase of 2% over the "Holiday".....Anything over that is a huge increase as that income not previously available to tax is now taxed at 2%. Which is probably why the psuedo limit (more a dividing line) is now at $110,000. It has been going up every year. This is just a device so Obama can keep his promise of not raising taxes on those making under $200,000.

Like I said, it is no longer a limit, just a dividing line. If this becomes permanent, If you make $500,000 a year, you will pay $4620 on the first $110,000 and $7800 on the next $390,000 for a grand total of $12420 in social security tax which is almost a whopping 87% net increase in social security taxes paid from before the holiday when you were "Maxed out at $6820".

They went after the limit with this....they did it for two months to confuse the issue because the cowards in the Senate and the House did not want to admit what they did. They went for a temporary fix.....now the easiest thing to do is extend it indefinitely. As a side note, the dividing line for the 99th percentile of earned income for a single earner in the US is right at about the $200,000 mark. This is exactly why you are seeing all this emphasis about the 99% these days.

This does nothing except fuel class warfare as if someone making over $200,000 is the top 1%, then there is no way the additional taxes will help pay for any "Shortfall"


:(

Mod Note:

My husband went to the doctor several years ago and was told he is "borderline pre-diabetic." So he's not a full blown diabetic, only pre-diabetic, and only borderline.

Relevance, counsel?

Well, this thread is borderline, pre-TOS violation of political discussions. It's so close my eyes are just starting to water.

Well Vags, if the limit wasn't ok, then it wouldn't be the limit :D

I'm just talking about how it affects my paycheck issued from my company the next two months. That's not politics, that's mathematics.
:D

I will refrain from anymore editorial comments about the constitution of the congresspeople's constituents.

Regards,

Jakal

"...according to the Marxist in Chief..."


That's not politics? Huh?

Seems like a statement of fact to me.;)

+1........

WRONG!! Good grief, that is not at all what the recapture is about. You need to take a break from Faux news and go talk to an accountant.

Only if you're COMPLETELY ignorant of what Marxism is.

"When I use a word," Humpty Dumpty said in rather a scornful tone, "it means just what I choose it to mean -- neither more nor less."
"The question is," said Alice, "whether you can make words mean so many different things."
"The question is," said Humpty Dumpty, "which is to be master - - that's all."
(Through the Looking Glass, Chapter 6)

Let me know if this is close:

the political, economic, and social principles and policies advocated by Marx; especially: a theory and practice of socialism including the labor theory of value, dialectical materialism, the class struggle, and dictatorship of the proletariat until the establishment of a classless society.

Your right he missed the definition of marxist by a mile (he only got 7 out of 8), dialectical materialism is supposed to result in maximum efficiency. No way we are striving for any efficiency.

"The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through Feb. 29, 2012.
Under the terms negotiated by Congress, the law also includes a new “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions. The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision.

Employees should consult with their personal tax advisor regarding the specific tax impact as it varies based on individual facts and circumstances.

Managers, please provide a copy of this notice to your employees without e-mail access.

U.S. Payroll Services"

The way I read this is that you will pay 4.2% into SS until you reach the 110,100/12 (9175x2) number of 18,350 for two months. So in actuality it is still a tax cut until you reach said amount during Jan-Feb months then the rest is taxed at the normal rate of 6.2%. I would imagine that the total amount paid into SS will be reduced by the difference between $770.70 and $1137.70 which is $367 dollars if you make at least $110,100.

It's funny, but as I remember it the republicans were against any Soc Sec payroll tax cut at all, and the dems got them to at least do this for 2 months. Eitherway, this should save the neediest of FDX pilots at least $367 which if we got what I think I remember the White House wanting (another year of 4.2%) would have saved us $2202 like last year.

I can't leave it at that...

The basic reason for the recapture is that the 2% break is only for money earned the first two months of the year. Soc. Sec withholdings are still stopped when the taxpayer reaches the $110,000 limit. Without the recapture, high income earners would possibly gain a tax advantage over those that do not earn over $110,000/yr.

Most easily explained by:

Taxpayer #1 earns $9167/mo. Jan - Feb he pays 4.2% = $770. Mar -Dec he pays 6.2% = $5684, for a yearly total of $6454.

Taxpayer #2 earns $55000/mo. Jan and Feb he pays 4.2% = $4620. Mar - Dec he pays nothing, for a yearly total of $4620.

So, the guy making $660,000/yr would be paying $1834 less than the guy making $110,000/yr. That of course, is a worst case scenario. But, I thought it would be easiest for the dittoheads to follow.

That's the reason. If they agree to a complete year of 4.2%. The recapture will be unnecessary.

Good discussion. Lets add that the 6.2% only covers half of the money we pay into the system. Second the Repubs know that the 2% reduction is only putting SS into a bigger whole that our kids will have to dig out of. Since the Dem voters kids wont actually work, I can see why they dont mind piling more debt on the repub kids to pay off.

You Sir, make TOO MUCH money AND are part of our overall problem in this Country!!!:)
I just read the e-mail, myself, about 10 minutes ago.
Cheers,
fbh

Which "news" channel were you watching?

The way I heard it was the rebubs wanted a full year and the dems would only go for 2 months at a time - that way when they extend it again it makes it look like they are working hard for us :eek:

I think that the recapture they are getting at will apply if your company doesn't take out your FICA at 4.2/6.2% differential and you end up only paying 4.2% for all of the first 2 months though you earned over $18,350. They are saying "be prepared".

Although I agree it's an unfunded tax break (just like the $500B/yr Bush tax cuts) I'll take the $$ now as well thanks. (I don't have a party affiliation either).

I don't remember it that way...

Uhhh....

"...President Obama is proposing a one-year extension and expansion of the tax holiday already in place on the employee share of the payroll tax, cutting it to 3.1% from the 2011 rate of 4.2%. He also proposes cutting the employer share of the tax to 3.1% from 6.2% on the first $5 million of payroll next year; there would be a complete employer payroll tax holiday for companies that grow their payrolls up to $50 million in a year by hiring new workers or raising the salaries of existing workers..."



Fox Business News-Obama's payroll tax plan

Just looking at the math, and no matter how you spin it, SS has turned out to be one of the worst Ponzi schemes ever foisted onto the public at gunpoint.

Most of us would be far better off just stuffing that money into a safe place.

And that is all there is to it, but many are going to try to help you for your own good. They will always be very dangerous.

The original SS was a noble effort, but if you actually study the history, it has been perverted and mutated beyond any reasonable meaning.

Read the last sentence of the first paragraph

Payroll tax cut extension passed in Congress - Political Hotsheet - CBS News

PBGC working the airline bankruptcies just like it did in 1983, 1989, 2001, 2002, 2004 and 2005. Right?:rolleyes:

PBGC is another program that meets Ponzi standards, any real accounting shows them to be bankrupt.

But, the difference this time is that they are actually making an attempt to protect the workers pensions. As opposed to just letting the company pawn it off at pennies to the dollar to the PBGC.

Who is "they" in this case, and can you show us any real world results?

Much like yet another Ponzi, the FDIC, there is nothing like a real emergency to test plausibility. I can tell you it is not plausible, the numbers can't lie, but people frequently do.

Not the case.

That was after the right changed their position on Nov. 29. Before that...They were against any Soc. Sec. tax cut extension.

Spin it all you like, the undeniable truth is that both sides use our money to play their game with almost zero accountability and zero benefit.

Playing sides in this matter has proven over time to be a complete waste.

But it is part of the divide/conquer dialectic. And it works so well!

Ok, that makes sense. I am man enough to admit when I am wrong. I will refrain from making any more political comments. Thanks for the correction.

Jakal:o

Executive summary: Noise and smoke were emitted, but there has been no material change in the Ponzi. The Kabuki will continue, with different players, dances and songs. Enjoy your entertainment, you paid for it.:D

Of course that only leaves the repeal of the Bush Tax cuts, the 3.8% investment surcharge and the extra 1% medicaire tax for those of us alpapac contributors that make over $250K. All kicking in next year.

This and this.

I'm not completely ignorant of what Marxism is and this discussion and actions of "the Marxist-in Chief" tend to be more in line with what "Marxism" is than what it isn't.

This leads me to believe someone is ignorant about their assumed understanding of socioeconomic theory.

nnnnnnnno. If you think that Obama is a Marxist, you are indeed completely ignorant of Marxism.