How to Estimate Social Security Tax
- 1). Look up the Social Security tax rate and wage limit on the Social Security Administration website. As of 2011, the rate equals 4.2 percent, and it affects the first $106,800 of earned income.
- 2). Estimate your wage income for the year. Do not include unearned income like interest or profits from stocks.
- 3). Compare it to the maximum amount of wages subject to the Social Security tax and use the smaller of the two amounts as subject to the Social Security tax. As of 2011, the limit equals $106,000. For example, if you expect to earn $120,000 in 2011, use $106,800. If you expect to earn $56,000, use $56,000.
- 4). Multiply the smaller of your wage income or the limit by the Social Security tax rate to estimate your Social Security tax for the year. For example, if you make $56,000 in 2011, multiply $56,000 by 0.042 to estimate your Social Security taxes, which will be $2,352.
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