Q: I stopped working full-time at the end of 2014 and started Social Security retirement. For the next few months I will work part-time and then retire completely.
Will Social Security payroll tax be held from my paycheck? If yes, will this increase my retirement amount?
A: Yes, you continue to pay Social Security and Medicare payroll taxes. Your employer will continue doing so too. Everyone working in employment or self-employment covered by Social Security must pay payroll taxes regardless of age or eligibility to Social Security benefits. Current and historical Social Security and Medicare tax rates are shown here.
If you are younger than full retirement age, remember annual earnings test limits.
Your new earnings would have to be better than the ones already used to compute your retirement amount to increase your monthly retirement amount. While possible, it is doubtful that a few months of part-time work will change your monthly retirement amount since the best 35 years of your working career are used.
Benefit amounts of everyone receiving Social Security benefits are automatically reviewed when new earnings are posted to their work record even when low earnings are involved. Due to this, your retirement amount will be automatically reviewed once these 2015 earnings appear on your work record.
Since you worked full-time all of 2014, it is much more likely that your 2014 earnings will increase your retirement amount when automatically reviewed.
Employers report your earnings to the Social Security Administration as part of the W-2 process. Different employer deadlines apply based on how reporting is completed. Employers have a March 31 deadline if electronically reporting 2014 W-2 information using Social Security Business Services Online (BSO). If reporting by paper, the deadline is the last day of February.
However reported, national posting of all wage information is usually complete in approximately October, with automatic reviews of benefit amounts starting once wage posting is complete. If 2014 earnings increase retirement benefits, you will receive the increase in approximately December 2015, with payment retroactive to January 2015.