Confusing Rule Changes for Social Security Taxes

Social Security taxes
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Julian Block
Columnist
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Writers and other freelancers know that the Affordable Care Act (ACA) overhauled the rules for medical insurance. What they might not know is that the overhaul also changed some tax laws.

The ACA includes a provision that could increase Social Security taxes for some writers who are employees and high earners. Similarly, it might increase self-employment taxes for some writers who are freelancers and high earners.

What’s New

Medicare surtax on earned income. What is new and often misunderstood is the ACA’s introduction of an additional Medicare tax of 0.9 percent. The surtax applies to relatively few writers, as it targets only employees and freelancers who are high earners.

The surtax hits joint filers with wages above $250,000 ($125,000 for married couples filing separate returns) and single filers over $200,000. The levy also applies to individuals with self-employment income above the thresholds.

What’s Left Unchanged

Writers with salaried jobs. The ACA left unchanged writers’ liability for Social Security taxes, levies known officially as FICA (short for Federal Insurance Contributions Act) taxes. Long-standing rules require employers to withhold FICA taxes from amounts paid to their employees as wages, salaries, or other forms of compensation.

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