Tax Season 2013 for EntitiesFebruary 4, 2013
How Do I Calculate Self-Employment Taxes?February 18, 2013
2013 Social Security Rates and Ceilings
- The Social Security Administration announced that the wage base for computing the Social Security tax (OASDI) in 2013 increased to $113,700 from $110,100. The monthly Social Security and Supplemental Security Income (SSI) benefits increased 1.7% in 2013 due to a cost-of-living adjustment (COLA).
- The temporary decrease in the employee SS tax rate from 6.2% to 4.2% expired December 31, 2012. The 2013 SS tax rate for employees is to 6.2%. The employer SS rate remains at 6.2%.
- There is no wage ceiling on the 1.45% employee or employer Medicare tax; however, for the portion of wages in excess of $250,000 earned by a married filing jointly, $125,000 for a married filing separately, and $200,000 for singles, there is a surtax of 0.9%
- For example, Joe, a married filing jointly, earns $300,000 in tax year 2013. Joe’s employer must withhold 1.45% Medicare tax on $250,000 of his wages and 2.35% (1.45% normal Medicare tax + 0.9% surtax) on the additional $50,000.
Employers will continue to pay 1.45% Medicare tax on employee wages, regardless of the amount paid.
2013 Standard Mileage Rates
Announced in Notice 2012-72, beginning on January 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:
- 56.5 cents per mile for business miles driven
- 24 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
Pension Plan Limitations
In IR-2012-77, the IRS announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2013. Please see this link for the 2013 Inflation Adjustments.