Most Americans are aware that they will be entitled to some monthly payment from the federal government when they retire. The “FICA” acronym on their paychecks is a monthly reminder of that. But, what really does social security mean to your employees? What specific details do your employees need to know about social security taxes and benefits?
Wrongful actions by uninformed employees can massively affect both the employee and the employer in the long run. As an employer, it is not wise to assume that your responsibility is simply to educate your workers about retirement plan options available for them. There is more to it beyond the employer-sponsored retirement plan that employees need to be acquainted with. Here are some of the things that you could be overlooking:
Eligibility for Social Security Disability Insurance (SSDI) is Knotty
Employees may believe that they are automatically qualified for the SSDI once they sustain an injury or are diagnosed with a disability. That’s mistaken. For starters, SSA has a definition of disability that candidates must meet. SSDI benefits are available only to people with long-term or permanent disabilities. If your Social Security Disability claim has been denied erroneously, consider hiring an attorney from The Walthew Law Firm to help you build a case and appeal the decision or file a lawsuit.
Besides medical eligibility, you must have collected a certain number of work credits for your age to qualify for SSDI. If you are 50 years old, for instance, you need at least 28 work credits. Workers can earn a maximum of 4 work credits per year.
Taking benefits too early has implications
According to studies, the majority of people take Social Security almost immediately after they turn 62 years old and believe this is the right thing to do. This has the obvious advantage that you get to enjoy the benefits early, but then again it means having them reduced by a whopping 25 percent compared to if you waited until your full retirement age.
The IRS will probably tax your benefits
It may sound absurd, but your Social Security benefits are taxable. Whether or not, the IRS will want a piece of your benefits, however depending on your income level. So, you divide your social security benefits by two and add it to your other income, i.e. adjusted gross income and nontaxable interest. If you are single and the resulting amount exceeds $25,000, your benefits will be taxed. If you are married and are filing as a couple, the limit is $32,000.
Social Security benefits have a maximum amount
As stated above, the amount you receive in social security is partly determined by how soon you take the benefits. The maximum you can receive per month having retired at full retirement age is $2,861 as of 2019.
You can also increase your benefits by working at least 35 years, earning a fairly high income. If you earn the highest taxable income per year throughout your career of no less than 35 years, you can be sure to receive the maximum benefit.