Line 31: Excess Social Security Tax . Social Security Withholding on Wages Wages are subject to other forms of withholding in addition to the federal income tax. If you have questions about your tax liability or want to request a Form W-4V, you can also call the IRS at 1-800-829-3676. The Social Security tax is withheld at a flat rate of 6.2% on gross wages after subtracting any pre-tax deductions that are exempt from Social Security taxation. Set Up Social Security Tax Withholding. A withholding tax is the amount of money that an employer or agency, such as the Social Security Administration, deducts from your benefits check and forwards to the Internal Revenue Service (IRS). The Social Security tax rate for both employees and employers is 6.2% of employee compensation (for a total of 12.4%). Certain government employers (some federal, state and local governments) don't have to withhold Social Security tax. Set up Social Security tax withholding. The maximum Social Security tax was $8,537.40 per year in 2020, which represents 6.2% of taxable wages up to that year's Social Security wage base: $137,700. Excess Social Security tax is calculated based on each year's maximum Social Security tax limits. It is used to pay the cost of benefits for elderly recipients, survivors of recipients, and disabled individuals … Employers remit withholding tax on an employee's behalf. If you work for a railroad employer, your employer must withhold Tier 1 Railroad Retirement Tax Act (RRTA) tax and Tier 2 RRTA tax. There are a variety of factors that determine whether your Social Security benefit will be taxed in retirement. See how FICA tax works. The remaining 24 states may tax Social Security income, but they don't all handle taxes the same way. Any taxes deferred under Notice 2020-65 are withheld and paid ratably from employee wages between January 1, 2021, until April 30, 2021. Some of these states will tax up to the same 85% of benefits as the federal government. The Social Security tax rate for those who are self-employed is … Others tax Social Security benefits to some extent but they offer breaks based on your age and income level. Those who owe taxes on their Social Security payments can elect to make quarterly estimated tax payments to the IRS or have federal taxes withheld from monthly payments. The Social Security retirement and disability programs require all workers to pay in to the system through payroll taxes. The FICA tax rate, which is the combined Social Security rate of 6.2 percent and the Medicare rate of 1.45 percent, remains 7.65 percent for 2020 (or 8.55 percent for taxable wages paid in excess of the applicable threshold). Factor in state taxes. The taxes, which are technically called Old Age, Survivors and Disability Insurance, or OASDI, are calculated at 6.2% of employees' wages. 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