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Social Security Contributions

Many times individuals have had questions regarding their own Social Security contributions. Uncertainties on how to pay Social Security contributions if you are not an employee of a company or if employers have to withhold Social Security contributions often lead to questions like the ones answered below by the Experts.

What paperwork is needed in order to contract an individual that is imported in Spain to make sure the individual has Social Security Contributions?

If the individual is not an employee of the company in Spain you will include the payment for their services on Schedule C as an independent contractor of their 1040 IRS Form. Schedule C will be used to report all of the individual’s income and expenses for this contracted work. Additionally the individual will need to fill out Schedule SE for self-employment tax. It will be used to figure out the tax for Social Security and Medicare tax. This will also cover Social Security contributions that the individual is required to make.

As a small business owner does the owner need to withhold Social Security Contribution and taxes of the employees?

Categorizing employees incorrectly is a frequent mistake of new businesses. If you categorize your employees incorrectly then you could be unlawfully denying them benefits including Social Security Contributions. The IRS has very strict guidelines of what an employee is. Classification of employees is very important when it comes to how they are treated regarding their pay. Typically workers of a cleaning company are W-2 employees and not contractors. The cleaning company would be contracted by another company or individual but they workers of the cleaning company would be employees of the contracted company. W-2 employees are expected to have the correct taxes and Social Security contributions withheld from their pay. An employer also pays a portion of the total Social Security contribution.

In schedule C of form 1040, I put my name in the "Name of proprietor" field because I am the owner of the business. My spouse was paid directly from customers as they did all the work. Now the IRS said that my spouse did not report their income. How can I rectify this?

You may rectify this error in one of two ways. First option would be to file a 1040X and attach a new Schedule C that has your spouse’s name as the sole proprietor of the business. Second option is that you can file a 1040X and attach two Schedule C Forms, where you are splitting all income and expenses. Then file a separate SE Form. This will report self-employment tax. You would need to fill one out for you and for your spouse. The benefit to splitting all income and expenses would be that you will both get separate credit for your Social Security contributions.

I owe some back federal taxes. Can I authorize the IRS to take my Social Security contributions to pay these back taxes off?

Social Security contributions typically refer to the amount of tax you pay into Social Security from your paycheck or self-employment or the like. From that you cannot pay back taxes as those are taxes you are currently paying. If you are meaning the checks that you receive from the government for social security benefits then you may use that to pay back taxes.

Our Company is planning on hiring an employee in the state of WA. We need to know if we pay a worker $15 an hour what additional expenses is mandatory that we pay. Such as Federal Taxes, Social Security contributions, etc. and how much of a percentage is this?

Businesses that have employees are responsible to withhold and pay Medicare and Social Security contributions. Currently an employer is responsible to pay 7.65% of the employees wage for Medicare and Social Security taxes combined. State unemployment tax can vary. Federal tax and 5.65% for Social Security contributions and Medicare will need to come out of the employees pay. So the total Social Security contributions and Medicare that will be paid is 7.65% from you the employer and 5.65% from the employee.

Knowing the right information and having a good understanding about Social Security contributions can help when faced with questions regarding those contributions. Experts can help answer how a self-employed individual can make Social Security contributions or if employers are required to withhold Social Security contributions from a paycheck. Get the answers fast and affordably by asking an Expert.
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