Employees of American companies earning labor income means that they are required to pay social security taxes. If they do not pay, they will be fined. When they pay a certain amount, they can receive social security retirement benefits at the prescribed age. This retirement benefit/pension is issued by the government and is one of the Social Security Benefits (Social Security Benefits), administered by the Social Security Administration. The following prerequisites must be met:
1. The income before retirement is labor income. Not all income is recognized. It must be labor income. Whether it is working for others or starting a business by yourself, it is considered labor income. However, if you receive investment income such as unemployment benefits, stocks or real estate, it is not labor income, and you must pay attention to judgment. If you are really confused, you can look at the tax bills you receive at the end of the year. Usually, W-2 forms, 1099-NEC forms, and cash income from part-time jobs are labor income.
2. Pay social security benefit tax. As long as you have labor income, you should declare and pay Social Security Tax (social security benefit tax), which is a mandatory tax. Generally, it is deducted and paid for you before the unit pays wages, or you pay it yourself. The tax rate is 12.4% of working income. For workers who receive W-2, 12.4% of the tax comes from two parts: individuals (6.2%) and companies (6.2%). Individuals need to pay the entire 12.4% tax independently, and it is possible that the employer has not deducted this part of the tax for you, so they have to submit it to the tax bureau by themselves, otherwise fines are likely to occur.
3. Save up to 40 Credits, that is, 40 points/points. 1 point is about $1510 (in 2022) after-tax income, and you can only save up to 4 points per year, so the fastest time to accumulate points is 10 years (although high income cannot speed up retirement benefits, it can affect the benefits of pensions. amount). For example, if you are a 55-year-old new immigrant, in order to receive social security retirement benefits in the United States, you need to start working immediately and accumulate points in order to receive the American pension at the earliest age of 65.
4. Reach the required age. Since it is a retirement benefit, it is difficult to receive it in the young and middle-aged, even if you have worked for 10 years. The full retirement age is 66 for those born between 1943 and 1954 and 67 for those born in 1960 or later. Of course, not everyone wants to retire as scheduled. If you plan to retire early, you need to be 62 years old at the earliest. At this time, the pension is at most 75% of the full amount; you can also consider postponing retirement, but starting from 70 years old, retirement Gold can receive up to 132% of the full amount. It can be seen that during the period from 62 to 70 years old, the older the age, the higher the pension amount. How to receive social welfare benefits at a young age, you can refer to other benefits mentioned later.
How are Social Security benefits calculated?
You can directly log on to the website of the Social Security Administration: https://www.ssa.gov/benefits/retirement/planner/AnypiaApplet.html
How to check my points in the Social Security Bureau?
You can register an account on the Social Security Administration website: https://www.ssa.gov/myaccount/
In addition to pensions, other types of Social Security Benefits:
Disability benefits
People who have accumulated enough social security points (Credits), suffer from serious physical or mental illness and cannot engage in regular work due to illness for more than one year, or those who suffer from incurable diseases, can receive disability benefits. Generally speaking, a job with a monthly income of more than $800 is considered a regular job.
Family Benefits
If eligible for superannuation or disability benefits, your family members may also receive family benefits. Family members include:
Spouse over 62 years old
Under the age of 62, but need to support a child under the age of 16
Unmarried children under the age of 18
The child is a student under the age of 19
The child is 18 years of age or older and has a disability
※If you are divorced, your ex-wife or ex-husband is also eligible for this benefit.
Survivors
If you saved enough social security points (Credits) but died, your family members can receive survivor benefits. Family members include:
Widows aged 60 or over
Widows aged 50 or over who are disabled
Widows of any age who need to support a child under the age of 16
Unmarried children under the age of 18
The child is a student under the age of 19
The child is 18 years of age or older and has a disability
Parents whose main source of income is you
Personal tax must be submitted annually by yourself or your family or by an accountant, and cannot be done by the unit or institution you work for. Normally, the period from the end of January to April 15th is the time window for summarizing and declaring the income of the previous year, and fines may be incurred if it is overdue. In addition to the federal tax bureau IRS at the national level, various tax forms and material submission departments may also have state and local tax bureaus, financial supervisory bureaus and other departments. In order to standardize the large-scale tax declarations across the country every year, the formal “organization” or “person” that gives you funds/assets should provide relevant vouchers and tax forms before you file taxes, such as W-2 or 1099-NEC for employers to pay wages, 1099-INT for the bank to issue interest, 1099-G for the government to issue unemployment benefits, etc. It should be noted that if there are errors/omissions in the personal declaration, there may be a progressive fine according to time, please make sure to pay the tax in time; at the same time, please collect or scan all tax forms, bills or vouchers for tax inspection purposes.
The opinions expressed by HHL Advisors Group are for information sharing only and do not constitute any legal advice.
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