There are, however, exemptions available to specific groups of taxpayers. If you fall under one of these categories, you can potentially save a significant amount of money.
However, if you do take advantage of the exemption, you will be ineligible to receive any of the benefits offered by Social Security. Members of certain religious groups qualify for the exemption, but it must be a recognized religious sect opposed to accepting Social Security benefits. Some of those benefits include payments during retirement and payments in the event of a disability or at death.
In addition, the religious group must have existed as of the end of and must have continuously provided its dependent members with a reasonable standard of living since that time.
A nonresident alien working in the U. There are some exceptions. Foreign students and educational professionals in the U. Nonresidents working in the U. Their families and domestic workers can also qualify for the exemption. All new employees will automatically be opted out of paying Social Security tax and contribute 9.
Employees can access their retirement accounts and change their contribution rates at any time. If new employees want to change their Social Security tax election, they must submit a Social Security tax election form within 30 days of their hire date. An open-enrollment period will be held each year in June when all employees can change their election for the upcoming fiscal year, which begins on July 1. Once the election has been made, it will remain in effect throughout subsequent fiscal years until the employee elects otherwise.
Individuals can earn up to four credits per year based on an earnings level that Social Security may change each year. Individuals need 40 credits 10 years of work to be eligible for Social Security retirement benefits. If employees opt out of paying Social Security tax before they have enough credits to qualify for benefits, the credits will remain on their Social Security record.
If they decide to opt in later or leave ARUP and begin working at another company where they pay Social Security tax, they will earn more credits.
Individuals and representative payees with a my Social Security account can opt out of receiving notices by mail that are available online via the Message Center, including the Social Security annual cost-of-living adjustment and the income-related monthly adjustment amount benefit rate increase.
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Related Articles. Partner Links. Related Terms Your Complete Guide to Social Security Tax This tax, levied on both employers and employees, funds Social Security and is collected in the form of a payroll tax or a self-employment tax. What Is Self-Employment Tax? Self-employment tax is the tax that a sole proprietor or freelancer must pay to the federal government to fund Medicare and Social Security.
IRS Publication details U. What Is a Freelancer? A freelancer is an individual who earns money on a per-job or per-task basis, usually for short-term work. What Is the Taxable Wage Base? The taxable wage base is the maximum amount of earned income that employees must pay Social Security taxes on. Investopedia is part of the Dotdash publishing family. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
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