11

My last check from my employer this year shows a 60% decrease in the amount taken out by social security (FICA-OASDI). Net result is a larger take home amount.

Does anyone know why that would happen?

  • 3
    Maybe your salary exceeds the maximum amount subject to Social Security tax by a small amount, and your last paycheck is what put you above the limit? – Dilip Sarwate Jan 1 '14 at 17:24
  • I think you are correct. But it seems part of the amount was taxed, indicating I barely made it over the limit for 2013? – 4thSpace Jan 1 '14 at 18:14
  • 2
    $113700 was the maximum subject to Social Security withholding in 2013. The smaller medicare portion has no limit. – JoeTaxpayer Jan 1 '14 at 18:57
  • What country are you in? – DJClayworth Jan 1 '14 at 21:02
  • 1
    @DilipSarwate and JoeTaxPayer, can one of you post as answer and I'll accept? – 4thSpace Jan 1 '14 at 21:40
23

If your annual salary exceeded the maximum amount subject to Social Security tax for 2013 ($113,700 as per JoeTaxpayer's comment), then it is possible that the last paycheck is what put you over the limit. Thus, part of the salary on the last paycheck had Social Security tax withheld and part did not. As JoeTaxpayer points out, there is no limit on the earnings subject to Medicare tax, and so that amount should not have changed at all.

  • 1
    It is slightly more complex because before calculating the Social Security tax they reduce your gross by health insurance premiums, Flex spending or HSA contribution, Vision, and Dental. So your gross salary could exceed $113,700 but not reach the social security maximum. – mhoran_psprep Jan 2 '14 at 2:07
  • 1
    Also, 401k is tax free for income tax, but taxed for social security, so the gross is reduced by all the health related deductions, but not by the 401k. – littleadv Jan 2 '14 at 3:43
  • In 2015 I believe that amount is $118,500 – CrimsonX Nov 20 '15 at 23:55

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