Social Security wage base increases to $117,000 for 2014
The Social Security Administration has announced that the wage base for computing the Social Security tax (OASDI) in 2014 increases to $117,000 from $113,700, which was the wage base for 2013. The $3,300 increase, which is about 2.9%, is due to an increase in average total wages.
The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers—one for Old Age, Survivors and Disability Insurance (OASDI; commonly known as the Social Security tax), and the other for Hospital Insurance (HI; commonly known as the Medicare tax).
For 2014, the FICA tax rate for employers is 7.65% each—6.2% for OASDI and 1.45% for HI. For 2014, an employee pays:
a. 6.2% Social Security tax on the first $117,000 of wages (maximum tax is $7,254.00 [6.2% of $117,000]), plus
b. 1.45% Medicare tax on the first $200,000 of wages ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return), plus
c. 2.35% Medicare tax (regular 1.45% Medicare tax + 0.9% additional Medicare tax) on all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return). (Code Sec. 3101(b)(2))
For 2014, the self-employment tax imposed on self-employed people is:
12.4% OASDI on the first $117,000 of self-employment income, for a maximum tax of $14,508.00 (12.40% of $117,000); plus
2.90% Medicare tax on the first $200,000 of self-employment income ($250,000 of combined self-employment income on a joint return, $125,000 on a separate return), (Code Sec. 1401(a), Code Sec. 1401(b)), plus
3.8% (2.90% regular Medicare tax + 0.9% additional Medicare tax) on all self-employment income in excess of $200,000 ($250,000 of combined self-employment income on a joint return, $125,000 for married taxpayers filing a separate return). (Code Sec. 1401(b)(2))
There is a maximum amount of compensation subject to the OASDI tax, but no maximum for HI.
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LA TAX AMNESTY 2013: A FRESH START
Are you behind on your taxes and not sure where to begin? Let us guide you through the process.
Louisiana Department of Revenue announces dates for LA Tax Amnesty 2013: A Fresh Start
Between September 23, 2013 and November 22, 2013, Louisiana taxpayers will be able to officially apply for tax amnesty and submit payment for all tax periods that are outstanding. Secretary of the LDR, Tim Barfield says, “This is the time for all Louisiana taxpayers to get a fresh start with their taxes. We have worked to make this process very simple and easy to use. The fastest way to get all the information needed to move through the process is to access the website( www.ldrtaxamnesty.com) and follow the prompts.”
The following taxes and tax periods are included in the amnesty program:
* The tax amnesty program shall apply to all taxes administered by
the department except for motor fuel taxes and penalties for failure
to submit information reports that are not based on an underpayment of
* Taxes due prior to January 1, 2013, for which the department has
issued an individual or a business proposed assessment, notice of
assessment, bill, notice, or demand for payment not later than May 31,
* Taxes for taxable periods that began before January 1, 2013.
A taxpayer is eligible for amnesty under any of the following circumstances:
* The taxpayer has received a notice for the failure to timely
file a return or for the failure to remit the amount owed;
* The taxpayer has an outstanding tax liability but has never
filed a Louisiana return;
* The taxpayer has an outstanding tax liability but has not been
billed by the department;
* A lien has been issued against the taxpayer's property;
* LDR has initiated proceedings under assessment and distraint procedures;
* LDR has entered into an installment agreement with the taxpayer;
* The taxpayer has filed for bankruptcy protection;
* The taxpayer is involved in a field audit;
* The taxpayer is involved in litigation;
* The taxpayer's liability consists of interest and penalty;
* The taxpayer's liability consists of interest only; or
* The taxpayer's liability consists of penalty only.
The following are not eligible for the Fresh Start program:
* Taxpayers who are a party to any criminal investigation or
criminal litigation, in any court of the United States or the State of
Louisiana pending on August 1, 2013, for nonpayment, delinquency, or
fraud in relation to any state tax imposed by a law of the State of
Louisiana and administered by the department, are not eligible for
* Taxpayers who deliver or disclose any false or fraudulent
application, document, return, or other statement to the department in
connection with an amnesty application shall be ineligible for amnesty
and shall be subject to penalties of fraud.
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Contact: Matthew Person CPA or David Huff CPA , PFS
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