Social Security pays millions of Americans benefits that they rely on for making ends meet. But while many people understand the financial challenges that the program faces, they don't necessarily know how Social Security taxes work and how the program gets the revenue it needs to pay those benefits.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, takes a closer look at Social Security taxes, running through three essential aspects that everyone should know. Dan notes that payroll taxes provide the major source of income for Social Security, with employees paying 6.2% of their wages and employers matching that amount on their behalf. Self-employed workers have to pay both halves of the 12.4% total tax themselves. He then discusses the wage-base limit of $117,000 for 2014 and how it has nearly doubled in the past 20 years, and concludes with thoughts about how even deductions that reduce income-tax liability generally don't reduce the amount of Social Security taxes you have to pay.
Get smart about Social Security
You might not have much control over Social Security taxes, but the decisions you make about benefits can make a big difference to how much you receive from the program. In our brand-new free report, "Make Social Security Work Harder For You," our retirement experts give their insight on making the key decisions that will help ensure a more comfortable retirement for you and your family. Click here to get your copy today.