Do I pay FICA on Social Security benefits?

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Q. If a person is collecting Social Security and is over the full retirement age, do they still have to pay FICA? When are Social Security benefits taxed?
— Getting benefits soon

A. How your benefits are taxed — or aren’t — will depend on a few things.

When a person has reached full retirement age and continues to work as an employee or if they’re self-employed, they continue to pay FICA — which is Social Security and Medicare tax — on their earnings, said Sue Klimcsak, a certified public accountant and senior tax manager with Wilkin & Guttenplan in East Brunswick.

She said the FICA tax is a tax under the Federal Insurance Contribution Act. It’s a withholding tax if you are an employee, or there would be self-employment tax if you are self-employed.

If you reached full retirement age and are collecting Social Security, a portion of your Social Security benefit could be subject to income tax, she said. This income is taxed on Form 1040.

“The amount of Social Security benefits to be included in income and subject to income tax is based on your combined income,” Klimcsak said. “Your combined income is your adjusted gross income plus nontaxable interest plus half of your Social Security benefits.”

If your combined income is less that the thresholds listed below, the Social Security benefits are not taxed.

Also note New Jersey does not tax any Social Security benefits, she said.

Here’s a look at the thresholds:
• If you file a federal tax return as an “individual” and your combined income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
• If you file a federal tax return as an “individual” and your combined income is more than $34,000, up to 85 percent of your benefits may be taxable.
• If you file a joint return, and you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
• If you file a joint federal tax return and your combined income is more than $44,000, up to 85 percent of your benefits may be taxable.

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