GENERAL INFORMATIONSocial Security
In order to begin working in the United States, you will have to obtain a Social Security Number (SSN) and pay social security taxes, just as all Americans do. The taxes are withheld by your employer and submitted to the Internal Revenue Service (IRS) on a frequent, regular basis. If you are self-employed, you have the responsibility of submitting the taxes to the IRS yourself. Social security refers to the broad range of financial benefits available to practically all workers in the United States of America from the U.S. Federal Government. Most workers in America rely on Social Security benefits at some time in their lives such as when they retire and collect retirement benefits, when they become disabled during their working lives and are unable to work, or when they become eligible for survivors benefits upon the death of a worker. You pay Social Security taxes on your earnings up to a certain amount. That amount increases each year to keep pace with wages. In 2009, that amount is $106,800. Social Security is administered by the Social Security Administration (SSA). The three main programs that they administer are:
1) Social Security Survivors Benefits
2) Social Security Disability Benefits
3) Social Security Retirement Benefits
These three programs are all funded by payroll tax deductions-that means by every worker in America. Once you are in the system, you begin to accumulate credits towards future benefits. Once you are eligible for benefits, you may apply to the Social Security Administration to receive them.
If you are a non-U.S. citizen, you must have lawful alien status, permission by the U.S. Citizenship and Immigration Services (USCIS) to work in the U.S. and a Social Security number, in order to become part of the Social Security system. There is a SSA office in almost every city or county in the U.S. You may find your nearest office by calling SSA's national toll-free number: 1-800-772-1213.
Social Security taxes, also known as FICA (Federal Insurance Contribution Act) are usually withheld from your salary. As an employee, you are taxed 7.65%, which covers both Social Security and Medicare (the government health insurance program providing coverage to people age 65 and over).
The Social Security part of the tax is 6.20% of gross wages (wages before any deductions) up to $76,200. The Medicare tax is 1.45% of all earnings. Your employer is required to contribute an additional 7.65% to match your contribution. If you are self-employed, you pay Social Security taxes equal to the combined employee/employer tax (15.3%), which you must pay to the Internal Revenue Service (IRS) on a regular basis (although half of this tax is deductible as a business cost).
Out of every dollar paid in Social Security and Medicare taxes: 69 cents goes to a trust fund that pays retirement and survivors benefits; 19 cents goes to a trust fund that pays Medicare benefits; 12 cents goes to a trust fund that pays disability benefits. Your Social Security taxes also pay for administering Social Security. The administrative costs are paid from Social Security trust funds and are less than 1 cent of every Social Security tax dollar collected.