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Employer's Tax Guide for Federal Withholding 
What is Earned Income Credit
Tax Bracket
2005 SOCIAL SECURITY CHANGES
Cost-of-Living Adjustment (COLA):
| Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2003 through the third quarter of 2004, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 2.7 percent COLA for 2005. Other important 2005 Social Security information is as follows: |
| Tax Rate |
2004 |
2005 |
|
Employee |
7.65% |
7.65% |
|
Self-Employed |
15.30% |
15.30% |
| NOTE: The 7.65% tax rate is the combined rate for Social Security and Medicare. The Social Security portion (OASDI) is 6.20% on earnings up to the applicable taxable maximum amount (see below). The Medicare portion (HI) is 1.45% on all earnings. |
| Maximum Earnings Taxable: |
2004 |
2005 |
|
Social Security (OASDI only) |
$87,900 |
$90,000 |
|
Medicare (HI only) |
No Limit |
| Quarter of Coverage: |
2004 |
2005 |
|
Earnings required |
$900 |
$920 |
| Retirement Earnings Test Exempt Amounts: |
2004 |
2005 |
|
Under full retirement age
NOTE: One dollar in benefits will be withheld for every $2 in earnings above the limit. |
$11,640/yr.
($970/mo.) |
|
Year individual reaches full retirement age
NOTE: Applies only to earnings for months prior to attaining full retirement age. One dollar in benefits will be withheld for every $3 in earnings above the limit. |
$31,080/yr.
($2,590/mo.) |
$31,800/yr.
($2,650/mo.) |
| There is no limit on earnings beginning the month an individual attains full retirement age (65 and 4 months for retirees born in 1939; 65 and 6 months for those born in 1940). |
| Social Security Disability Thresholds |
2004 |
2005 |
|
Substantial Gainful Activity (SGA) |
|
|
Non-Blind |
$810/mo. |
$830/mo. |
|
Blind |
$1,350/mo. |
$1,380/mo. |
|
Trial Work Period (TWP) |
$580/mo. |
$590/mo. |
Maximum Social Security Benefit:
Worker Retiring at Full Retirement Age in |
2004
|
2005
|
|
NOTE: For retirees born in 1939, full retirement age is 65 and 4 months; for those born in 1940, it is 65 and 6 months. Full retirement age will gradually increase to age 67 for those born in 1960 or later. |
$1,825/mo.
(Age 65 and 4 months) |
$1,939/mo.
(Age 65 and 6 months) |
| SSI Federal Payment Standard: |
2004 |
2005 |
|
Individual |
$564/mo. |
$579/mo. |
|
Couple |
$846/mo. |
$869/mo. |
| SSI Resources Limits: |
2004 |
2005 |
|
Individual |
$2,000 |
$2,000 |
|
Couple |
$3,000 |
$3,000 |
| SSI Student Exclusion Limits: |
2004 |
2005 |
|
Monthly Limit |
$1,370 |
$1,410 |
|
Annual Limit |
$5,520 |
$5,670 |
Estimated Average Monthly Social Security Benefits
Payable in January 2005: |
Before
2.7% COLA |
After
2.7% COLA |
|
All Retired Workers |
$ 930 |
$955 |
|
Aged Couple, Both Receiving Benefits |
$1,532 |
$1,574 |
|
Widowed Mother and Two Children |
$1,927 |
$1,979 |
|
Aged Widow(er) Alone |
$ 896 |
$ 920 |
|
Disabled Worker, Spouse and
One or More Children |
$1,458 |
$1,497 |
|
All Disabled Workers |
$ 871 |
$ 895 |
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