Image: iStockphoto.com/Amal Sajdak
About This QuizDo you know how much you pay in Social Security tax each year? Did you know that you actually pay each time you receive a paycheck? Learn all about the Social Security system in the United States and find out how it benefits you by taking our quiz.
The United States Social Security system provides financial assistance to:
both of the above
If you have reached retirement age or been disabled in an accident or by illness, the Social Security system provides you with financial assistance.
The health insurance program that provides health care for the elderly is called:
Medicare, established to provide adequate medical coverage for those over 65, is part of the Social Security system.
Where does the money for Social Security come from?
social security tax
If you are employed, you and your employer will pay social security tax as a percentage of your paycheck into the Social Security Trust Fund, which disperses the money.
Which demographic factor is the main reason there are less social security funds available for payment to retirees than in the past?
increased life expectancy
The Baby Boomer generation, with its increased life expectancy and large numbers, is blamed for the financial difficulties of the Social Security Trust Fund. More and more people are not only reaching the age of retirement, but are enjoying the fruits of their labor for many years after.
increased birth rate
As of 2010, what percentage does the government take out of every working American's paycheck for Social Security taxes?
If you are an employee, half of the 15.3 percent Social Security tax is paid by you and half is paid by your employer. The amount paid by your employer, though it benefits you, is not counted as income for purposes of taxation.
Which United States law sets the percent rate for withholding tax that is paid to Social Security and Medicare?
the Federal Insurance Contributions Statute
the Federal Insurance Contributions Law
the Federal Insurance Contributions Act
The Federal Insurance Contributions Act (FICA) sets the percent rate of 12.4 percent that you pay to Social Security and the 2.9 percent that goes toward your Medicare benefits for a total contribution of 15.3 percent. FICA adjusts for inflation or cost-of-living increases (COLA) automatically.
Which United States law governs the Social Security taxes paid by the self-employed?
the Self-Employment Contraband Act
the Self-Employment Retributions Act
the Self-Employment Contributions Act
If you are self-employed, your tax obligation is governed by the Self-Employment Contributions Act (SECA). This law mirrors the Federal Insurance Contributions Act (FICA) which governs employees, so the contributions always remain the same.
If you overpay your Social Security tax during the year:
It will be returned to you.
If you switched jobs several times or worked at several jobs during the course of the year and therefore paid too much Social Security tax, the surplus amount will be returned to you as part of your tax return. The amount overpaid by your employers will not be returned.
It will not be returned to you.
You will receive a penalty.
The maximum amount of your income subject to Social Security tax is known as:
the Social Security Income Cap
the Social Security Income Base
the Social Security Wage Base
The income cap or maximum amount of income subject to Social Security tax, also known as the Social Security Wage Base, is set at $106,800 as of 2010.
What is your combined income?
the total of all your sources of income and one-quarter of your Social Security benefits
the total of all your sources of income and half of your Social Security benefits
Your combined income is your adjusted gross income (income minus certain allowable deductions) plus nontaxable interest (from bonds,etc) plus half of your Social Security benefits.
the total of all your sources of income and three-quarters of your Social Security benefits