what percentage of gross income is withheld as an employee's contribution to social security
Payroll tax Federal social insurance taxes are imposed on employers[20] and employees,[21] ordinarily consisting of a tax of 12.4% of wages up to an annual wage maximum ($118,500 in wages, for a maximum contribution of $14,694 in 2016) for Social Security and a tax of 2.9% (half imposed on employer and half withheld from the employee's pay) of all wages for Medicare.[22] The Social Security tax is divided into 6.2% that is visible to employees (the "employee contribution") and 6.2% that is visible only to employers (the "employers contribution"). For the years 2011 and 2012, the employee's contribution had been temporarily reduced to 4.2%, while the employer's portion remained at 6.2%,[23] but Congress allowed the rate to return to 6.2% for the individual in 2013.[24] To the extent an employee's portion of the 6.2% tax exceeded the maximum by reason of multiple employers, the employee is entitled to a refundable tax credit upon filing an income tax return for the year.[25]
Social Security number Before 1986, people often did not obtain a Social Security number until the age of about 14,[7] since the numbers were used for income tracking purposes, and those under that age seldom had substantial income.[8] The Tax Reform Act of 1986 required parents to list Social Security numbers for each dependent over the age of 5 for whom the parent wanted to claim a tax deduction.[9] Before this act, parents claiming tax deductions were simply trusted not to lie about the number of children they supported. During the first year of the Tax Reform Act, this anti-fraud change resulted in seven million fewer minor dependents being claimed. The disappearance of these dependents is believed to have involved either children who never existed or tax deductions improperly claimed by non-custodial parents.[10] In 1988, the threshold was lowered to 2 years old, and in 1990, the threshold was lowered yet again to 1 year old.[11] Today, an SSN is required regardless of the child's age to receive an exemption.[citation needed] Since then, parents have often applied for Social Security numbers for their children soon after birth; today, it can be done on the application for a birth certificate.[12]