Social Security

• Social Security is the reserve fund managed by the U.S. Social Security Administration. It is used to uphold the financial security of U.S. citizens who become disabled, widowed, orphaned, or reach retirement age. Nearly all workers are required to pay into the Social Security fund. The fund operates on a "pay now, collect later" system.
  
  

2010 Rates & Caps

• In 2010, the Social Security tax rate on those employed by an outside entity was 6.2 percent. The rate for self-employed persons was 12.4 percent (half of what this rate amounts to can often be deducted when tax season rolls around). The maximum wage subject to Social Security was $106,800 in 2010.
  
  

Employer Responsibilities

• Employers are responsible for deducting their employee's Social Security withholding before issuing payroll checks. They are also required to match the employee's Social Security and Medicare taxes such that 15.3 percent total is contributed into the Social Security fund on behalf of the employee.