Contribution and Benefit Base for 2002 Announced
2001-51 IRB 603
- Institutional AuthorsInternal Revenue Service
- Subject Area/Tax Topics
- Index TermsFICA taxFICA benefits
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2001-30949 (1 original page)
- Tax Analysts Electronic Citation2001 TNT 242-19
=============== SUMMARY ===============
The Social Security Administration has announced that the contribution and benefit base for remuneration paid in 2002, and self-employment income earned in tax years beginning in 2002 will rise from $80,400 to $84,900.
=============== FULL TEXT ===============
[1] Under authority contained in the Social Security Act ("the Act"), the Commissioner, Social Security Administration, has determined and announced (66 F.R. 54047, dated October 25, 2001) that the contribution and benefit base for remuneration paid in 2002, and self-employment income earned in taxable years beginning in 2002 is $84,900.
"Old-Law" Contribution and Benefit Base
General
[2] The "old-law" contribution and benefit base for 2002 is $63,000. This is the base that would have been effective under the Act without the enactment of the 1977 amendments. The base is computed under section 230(b) of the Act as it read prior to the 1977 amendments.
[3] The "old-law" contribution and benefit base is used by:
(a) The Railroad Retirement program to determine certain tax
liabilities and tier II benefits payable under that program
to supplement the tier I payments which correspond to basic
Social Security benefits,
(b) The Pension Benefit Guaranty Corporation to determine the
maximum amount of pension guaranteed under the Employee
Retirement Income Security Act (as stated in section230(d)
of the Social Security Act),
(c) Social Security to determine a year of coverage in computing
the special minimum benefit, as described earlier, and
(d) Social Security to determine a year of coverage (acquired
whenever earnings equal or exceed 25 percent of the "old-
law" base for this purpose only) in computing benefits for
persons who are also eligible to receive pensions based on
employment not covered under section 210 of the Act
Domestic Employee Coverage Threshold
General
[4] The minimum amount a domestic worker must earn so that such earnings are covered under Social Security or Medicare is the domestic employee coverage threshold. For 2002, this threshold is $1,300. Section 3121(x) of the Internal Revenue Code provides the formula for increasing the threshold.
Computation
[5] Under the formula, the domestic employee coverage threshold amount for 2002 shall be equal to the 1995 amount of $1,000 multiplied by the ratio of the national average wage index for 2000 to that for 1993. If the resulting amount is not a multiple of $100, it shall be rounded to the next lower multiple of $100.
Domestic Employee Coverage Threshold Amount
[6] Multiplying the 1995 domestic employee coverage threshold amount ($1,000) by the ratio of the national average wage index for 2000 ($32,154.82) to that for 1993 ($23,132.67) produces the amount of $1,390-02. We then round this amount to $1,300. Accordingly, the domestic employee coverage threshold amount is $1,300 for 2002,
- Institutional AuthorsInternal Revenue Service
- Subject Area/Tax Topics
- Index TermsFICA taxFICA benefits
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2001-30949 (1 original page)
- Tax Analysts Electronic Citation2001 TNT 242-19
