![]() You need to consider your lifestyle and personal circumstances. It's advisable to start saving for retirement as early as you can in the form of taking part in 401(k) plans, IRAs, and Roth IRAs.ĭon't worry about not starting early enough. The taxes you pay on OASDI may not cover all of your retirement expenses. The maximum taxable earnings will be $160,200 in 2023. They are, however, subject to Medicare taxes, which have no set minimum taxable earnings. This means wages earned above that amount are no longer subject to additional OASDI taxes for that calendar year. The maximum taxable earnings for OASDI is $147,0. There's a cap to how much of your earnings can be taxed. The OASDI tax represents 6.2% of your earnings, or 12.4% if you're self-employed. Amounts considered shareholder distributions are not subject to Medicare and Social Security taxes, but they are still subject to income taxes. S-Corporations pay Medicare and Social Security taxes on salaries paid to employees. There are S-corporations that could get out of paying OASDI tax, but those take a long time to set up," Parker adds. "Rental income, dividends, capital gains aren't subject to OASDI. ![]() Kenneth Parker, CPA, CGMA of Parker and Associates, LLC, emphasizes that only earned income is subject to the OASDI tax.
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