Tax News

CCH (cch.taxgroup.com) reports:

Social Security and Supplemental Security Income (SSI) benefits will increase by 3.3 percent in 2007, according to the Social Security Administration (SSA). The rates for Old-Age, Survivors and Disability Insurance (OASDI) and Medicare Hospital Insurance (HI) taxes will remain unchanged at a combined 7.65 percent in 2007, but the maximum taxable earnings for OASDI purposes will rise from $94,200 to $97,500.
The SSA increases are based on the rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of 2005 through the third quarter of 2006. For Social Security beneficiaries, the average monthly benefit amount for all retired workers will rise from $1,011 to $1,044, and the maximum monthly benefit will increase from $2,053 to $2,116. The monthly SSI federal payment standard for an individual will rise from $603 to $623; for a couple, the payment will increase from $904 to $934.
The retirement earnings test exempt amount (the point at which retirees begin to lose benefits in conjunction with their receipt of additional earnings) was eliminated for individuals age 65 through 69 as of January 2000. However, it remains in effect for individuals under full retirement age, and a modified test applies for the year in which an individual reaches full retirement age. "Full retirement age" is 65 and 8 months for individuals born in 1941, 65 and 10 months for those born in 1942.
For the year in which an individual attains full retirement age, the retirement earnings test exempt amount will rise from $33,240 a year to $34,440 a year. This test applies only to earnings for months prior to reaching full retirement age. One dollar in benefits will be withheld for every $3 in earnings above the limit. No limit on earnings will be imposed beginning in the month in which the individual reaches full retirement age.
For retirees under full retirement age, the retirement earnings test exempt amount will rise from $12,480 a year to $12,960 a year, with $1 withheld for every $2 in earnings above the limit.
CCH Comment. The SSA has also announced that the threshold amount for the payment of employment taxes for domestic services in the employer's home (also known as the "nanny tax") will remain at $1,500 in 2007. Any amount paid by an employer to any employee for domestic services under this amount is not subject to employment taxes. However, once the $1,500 threshold is met, the total amount paid to the employee (not just the excess) is subject to employment taxes.
Social Security Administration News Release, 2006FED ¶46,658
Social Security Administration Fact Sheet, 2006FED ¶46,659
Other References:
Code Sec. 1401
CCH Reference - 2006FED ¶32,543.01
CCH Reference - 2006FED ¶32,543.07
CCH Reference - 2006FED ¶32,543.26
Code Sec. 1402
CCH Reference - 2006FED ¶32,580.01
Tax Research Consultant
CCH Reference - TRC INDIV: 63,050
CCH Reference - TRC INDIV: 63,052
CCH Reference - TRC INDIV: 63,054
CCH Reference - TRC INDIV: 63,060
CCH Reference - TRC INDIV: 63,100
CCH Reference - TRC INDIV: 63,108
CCH Reference - TRC INDIV: 63,500