The annual inflation adjustments have also impacted the various Social Security
amounts and thresholds for 2015.
The Social Security wage base, for computing the Social Security tax (OASDI only),
increases to $118,500 in 2015, up from $117,000 for 2014. There is no taxable
earnings limit for Medicare (HI only) contributions. However, there is a 0.9%
Medicare surtax that is imposed on wages and self-employment (SE) income in excess of
the modified adjusted gross income (MAGI) threshold amounts of $250,000 for joint
filers, $125,000 for married separate filers, and $200,000 for all other taxpayers.
The MAGI thresholds are not adjusted for inflation. The surtax does not apply to the
employer portion of the tax.
For Social Security beneficiaries under the full retirement age, the annual exempt
amount increases to $15,720 in 2015, up from $15,480 in 2014. These beneficiaries
will be subject to a $1 reduction in benefits for each $2 they earn in excess of
$15,720 in 2015. However, in the year beneficiaries reach their full retirement age
(FRA), earnings above a different annual exemption amount ($41,880 in 2015, up from
$41,400 in 2014) are subject to $1 reduction in benefits for each $3 earned over this
exempt amount. Social Security benefits are not reduced by earned income beginning
with the month the beneficiary reaches FRA. But remember, Social Security benefits
received may be subject to federal income tax.
The Social Security Administration estimates the average retired worker will receive
$1,328 monthly in 2015. The average monthly benefit for an aged couple where both are
receiving monthly benefits is $2,176. These amounts reflect a 1.7% cost of living
The maximum 2015 Social Security benefit for a worker retiring at FRA is $2,663 per
month, up from $2,642 in 2014.
This publication is distributed with the understanding that the author, publisher and
distributor are not rendering legal, accounting or other professional advice or
opinions on specific facts or matters, and, accordingly, assume no liability
whatsoever in connection with its use. The information contained in this newsletter
was not intended or written to be used and cannot be used for the purpose of (1)
avoiding tax-related penalties prescribed by the Internal Revenue Code or (2)
promoting or marketing any tax-related matter addressed herein. © 2015