October 18, 2010 12:00 am

Social Security Amounts Unchanged for 2011

Social Security benefits and other amounts can be adjusted annually for inflation. However, because of the cost-of-living formula used for this adjustment and the lack of any significant inflation, there will be no increase in Social Security benefits in 2011. This is the second year in a row that there has been no increase.

Earnings Limit

Those who have not reached the full retirement age (currently 66) have a reduction in their benefits if they have earnings from a job or self-employment exceeding a set limit. For 2011, the limit is $1,180 a month ($14,160 for the year). Benefits are reduced by $2 for each $1 of earnings over this threshold.

The earnings limit for people turning 66 in 2010 will remain at $37,680. Benefits will be reduced by $1 for each $3 earned over $37,680 until the month the worker turns age 66.

Wage Base

The maximum amount of earnings taken into account in figuring the Social Security portion of FICA taxes remains at $106,800. There is no limit for the Medicare portion of FICA.

The same earnings base applies for self-employment tax purposes.

Relief?

There has been a suggestion that Congress make a $250 payment to Social Security recipients because of the lack of any increase in their benefits. However, deficit concerns may thwart passage of this proposal.

Source: SSA News Release 10-15-10

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Tax Glossary

Profit-sharing plan

A defined contribution plan under which the amount contributed to the employees’ accounts is based on a percentage of the employer’s profits.

More terms