Quarterly estimated tax payments must be made by taxpayers every quarter, and to be more precise, it is usually April 15, June 15, September 15, and January (IRS, n.d.). Social Security Tax has been paid in America since 1937 (SSA, n.d.). The tax rate has been constant over the years, while the taxable wage base is subject to changes. This provision funds retirees, dependents, and survivors, and the wage base for these funds is $ 142,800 (SSA, n.d.). After the employee reaches the maximum base salary per year, the money is no longer withheld by the employer and is not paid into the appropriate funds.
Along with social security, another mandatorily required deduction is the Medicare tax. In contrast, this tax does not have a base salary cap, and this fact causes much controversy (IRS, n.d.). The elimination of the base salary cap for social security tax could lead to the most significant tax increase in the state’s history. At the same time, it will eliminate the possibility of a social security deficit and eliminate inequities between the middle class and high-paid employees. The Medicare tax is less than the Social Security tax, but it is also considered more important because it finances the health care system.
Each retirement plan complies with IRS standards, is offered by the employer to employees, and implies investments that the employee will receive upon reaching retirement age. Retirement plans differ in the type of investment, the case of distribution, and the type of contribution. First, in addition to financial investments, the plans sometimes contain stocks, real estate, and money market funds. Secondly, at the direction of the employee, in which case the distribution takes place (incapacity, retirement age, or death). Finally, defined benefits or defined contributions distinguish between qualified retirement plans by the type of contribution to the fund.
Reference
IRS. (n.d.). Estimated taxes. 2021, Web.
IRS. (n.d.). Topic No. 751 social security and Medicare withholding rates. Web.
SSA. (n.d.). Social security history. Web.
SSA. (n.d.). Understanding the benefits. Web.