C12-Chp-00-5-Big Picture - Entities-SE Tax Comm. Rept-2010

C12-Chp-00-5-Big Picture - Entities-SE Tax Comm. Rept-2010...

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WK_ Standard Federal Tax Reporter 2012 Joint Committee Summary of PL 111-312 Tax Relief Unemployment Insurance Reauthorization and Job Creation Act o.pdf ©2012 Wolters Kluwer. All rights reserved. 1 Joint Committee Summary of P.L. 111-312 (Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010), Congress (United States) Click to open document in a browser .087 Self-employment tax rate reduced in 2011. Present Law Federal Insurance Contributions Act ( "FICA") tax The FICA tax applies to employers based on the amount of covered wages paid to an employee during the year. 81 Generally, covered wages means all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash. 82 Certain exceptions from covered wages are also provided. The tax imposed is composed of two parts: (1) the old age, survivors, and disability insurance ( "OASDI") tax equal to 6.2 percent of covered wages up to the taxable wage base ($106,800 in 2010); and (2) the Medicare hospital insurance ( "HI") tax amount equal to 1.45 percent of covered wages. In addition to the tax on employers, each employee is subject to FICA taxes equal to the amount of tax imposed on the employer (the "employee portion"). 83 The employee portion generally must be withheld and remitted to the Federal government by the employer. Self-Employment Contributions Act ( "SECA") tax As a parallel to FICA taxes, the SECA tax applies to the self-employment income of self-employed individuals. 84
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C12-Chp-00-5-Big Picture - Entities-SE Tax Comm. Rept-2010...

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