If you’re a wage earner, you are already aware of the expiration of the 2% payroll tax cut, but there are several other rules and features the Social Security Administration (SSA) will be implementing in 2013. Here’s a look at some of the Social Security changes that go into effect this year:
Payroll tax cut ended – The temporary payroll tax cut was allowed to expire at the end of 2012. Workers who paid 4.2 percent of their income into the Social Security system in 2011 and 2012 will now resume contributing 6.2 percent of their earnings in 2013, up to the payroll tax cap of $113,700.
Higher payroll tax cap – The payroll tax cap increased by $3,600, from $110,100 in 2012 to $113,700 in 2013. Workers who earn more than this threshold don’t need to pay Social Security taxes on that income.
More online services – A trip to the Social Security office is no longer necessary to start your Social Security payments. A growing number of retirees are claiming Social Security payments online. Workers can access their Social Security statements online, including their complete earnings history and expected payments. SSA added online services including the ability to access a benefit verification letter and payment history. Retirees can also change their address and start or change direct-deposit information online.
Reduced office hours – Social Security offices are reducing the hours they are open to the public to save money and avoid paying overtime to workers. Social Security locations nationwide have been closing 30 minutes early each day since Nov. 19, 2012, and they began closing to the public at noon every Wednesday on Jan. 2, 2013.
Paper checks will end – On March 1, 2013, the Treasury department will stop mailing paper checks to Social Security recipients. Retirees will be required to choose to have their Social Security payments either directly deposited into a bank or credit union account or loaded onto a prepaid Direct Express Debit MasterCard. New Social Security beneficiaries have been required to choose an electronic payment option since May 2011, and approximately 93 percent of Social Security and Supplemental Security Income (SSI) payments are already being made electronically.
Higher earnings limit -People between ages 62 and 66 who work and collect Social Security benefits at the same time might have part or all of their Social Security benefits temporarily withheld. Workers between ages 62 and 65 can earn up to $15,120 in 2013, after which $1 in benefits will be withheld for every $2 of income above the earnings limit. People who turn 66 this year can earn up to $40,080, and then $1 of benefits will be withheld for every $3 earned above the limit. However, once you turn age 66, the earnings limit no longer applies.
Bigger payments -Social Security beneficiaries began receiving payments that were 1.7 percent larger in January 2013. The average monthly Social Security benefit in January increased from $1,240 to $1,261 as a result of the cost-of-living adjustment.