A Factsheet from Social Security _______________________________________________________________ Social Security Administration SSA Publication No. 05-10027 January 1997 (Recycle prior editions) If You Work For A Nonprofit Organization About 95 percent of all workers are required by law to pay Social Security taxes. That wasn't true before 1984 when people who worked for nonprofit organizations did not pay into Social Security unless they specifically chose to take part in the program. But the law changed in January 1984 as part of a package of legislation designed to ensure the long-range financial stability of Social Security. SINCE THAT TIME, ALL EMPLOYEES OF NONPROFIT ORGANIZATIONS ARE REQUIRED TO PAY SOCIAL SECURITY TAXES. This factsheet explains some special rules about how to earn credits toward Social Security benefits that apply to employees of nonprofit religious, charitable, or educational organi- zations. SOCIAL SECURITY AND MEDICARE TAXES Generally, as an employee of a nonprofit organization, your earnings are subject to Social Security taxes if you are paid $100 or more in a year. (People who work for profit-making organizations pay taxes on all their earnings, even if less than $100.) But the Social Security tax rates you pay are the same as other workers. In 1997, you and your employer each pay 7.65 percent of your gross salary up to $65,400. If you make more than that, you and your employer continue to pay the Medicare portion of the Social Security tax (1.45 percent each) on the rest of your earnings. IF YOU WORK FOR A CHURCH OR CHURCH-RUN ORGANIZATION Some religious groups oppose paying Social Security taxes. By law, they are permitted to choose not to participate in the Social Security program. When a religious group doesn't participate, it doesn't withhold those taxes from your wages or pay the matching share of Social Security taxes like other employers. If you work for a church, or church run organization that doesn't pay into the Social Security program, you must pay Social Security taxes if your earnings are more than $100 per year. In effect, you are treated as though you are self-employed for Social Security. The self-employment tax rate is 15.3 percent, although there are special tax credits you can take when you file your tax return. For more information about Social Security self-employment taxes, ask your Social Security office for a copy of the factsheet "If You're Self-Employed" (Publication No. 05-10022). CREDITS NEEDED FOR BENEFITS In 1997, you will receive one Social Security credit for each $670 of earnings, up to a maximum of four credits per year. In future years, the amount of earnings needed for a credit will rise as average earnings levels rise. The number of credits you must have to be eligible for Social Security benefits depends on your age and the type of benefit you are eligible for. The next three sections explain this in more detail. Retirement Benefits In order to be eligible for Social Security retirement benefits, people born in 1929 or later need 40 credits. Those born before 1929 need less than 40 (39 if born in 1928, 38 if born in 1927, etc.). However, if you work for a nonprofit organization whose Social Security coverage was mandated by law starting in 1984, you may be able to receive retirement benefits with fewer credits. If you were BOTH 55 or older AND an employee of the organization on JanuaRY 1, 1984, you will need the number of credits listed in the table below. (The credits must be earned after January 1, 1984. This special rule does not apply if you declined Social Security coverage when it was offered by your employer prior to January 1, 1984.) ___________________________ Nonprofit Organization Employees 55 or Older ___________________________ Your Age On Credits January 1, 1984 You Need ___________________________ 55 or 56 20 57 16 58 12 59 8 60 or older 6 ___________________________ Disability Benefits The number of credits you need for disability benefits is the same as all other workers and depends on your age when you become disabled. No one needs more than 40 credits (10 years of work), but you may need fewer. Ask Social Security for a copy of the booklet "Disability Benefits" (Publication No. 05-10029) for more information about work credits needed for disability benefits. Survivors Benefits Survivors benefits may be payable to the widow or widower and minor children of a worker who earned enough Social Security credits. The number of credits needed depends on the worker's age at the time of death. As few as six credits (one and a half years of work) are needed to pay benefits to the survivors of a worker age 28 or younger. The table in the next column gives examples of the work credits needed for survivors coverage of workers at other ages. __________________________ Work Credits Needed __________________________ Age At Death Credits 35 13 40 18 45 23 50 28 55 33 __________________________ FOR MORE INFORMATION You can get recorded information about Social Security coverage 24 hours a day, including weekends and holidays, by calling Social Security's toll free number, 1-800-772-1213. You can speak to a service representative between the hours of 7 a.m. and 7 p.m. on business days. Our lines are busiest early in the week and early in the month, so if your business can wait, it's best to call at other times. Whenever you call, have your Social Security number handy. People who are deaf or hard of hearing may call our toll-free TTY number, 1-800-325-0778, between 7 a.m. and 7 p.m. on business days. You also can reach us on the Internet. Type http://www.ssa.gov to access Social Security information. The Social Security Administration treats all calls confidentially--whether they're made to our toll-free numbers or to one of our local offices. We also want to ensure that you receive accurate and courteous service. That's why we have a second Social Security representative monitor some incoming and outgoing telephone calls. ---------- A Factsheet from Social Security _______________________________________________________________ Social Security Administration SSA Publication No. 05-10017 January 1997 (Recycle prior editions) Military Service And Social Security The earnings of people who serve in the military services on active duty or on active duty for training have been covered under Social Security since 1957. Inactive duty service in the armed forces reserves (such as weekend drills) has been covered by Social Security since 1988. However, people who served in the military before 1957 did not pay into Social Security directly, but their records are credited with special earnings for Social Security purposes that count toward any benefits that might be payable. Additional earnings credits are given to military personnel depending on when they served. This factsheet explains how and when these special earnings are credited and provides other general information military personnel need to know about the benefits available from Social Security. PAYING SOCIAL SECURITY AND MEDICARE TAXES While you're in the military service (from 1957 on), you pay Social Security taxes the same way civilian employees do. Those taxes are deducted from your pay and an equal amount is paid by the U.S. government as your employer. In 1997, the tax rate is 7.65 percent up to a maximum of $65,400. If you earn more than that, you continue to pay the Medicare portion of the tax, 1.45 percent, on the rest of your earnings. SOCIAL SECURITY CREDITS You must have credit for a certain amount of work covered by Social Security before any benefits can be paid on your record. In 1997, you earn four credits (the maximum) if your annual earnings are $2,680 or more. (You earn one credit for each $670.) The amount needed for each credit will increase in future years to reflect increases in average wages. The number of credits you need to qualify for Social Security depends on your age and the type of benefit you might be eligible for. Nobody needs more than 40 credits (10 years of work or military service) to be eligible for Social Security. In some situations, you can qualify with less than 40 credits. EARNINGS ADDED TO MILITARY RECORDS FOR SOCIAL SECURITY PURPOSES The credits mentioned in the previous section determine if you are eligible for Social Security. The amount you get from Social Security depends on your earnings averaged over much of your working lifetime. Generally, the higher your earnings, the higher your Social Security benefit. Under certain circumstances, special earnings can be credited to your military pay record for Social Security purposes. These extra earnings may help you qualify for Social Security or increase the amount of your Social Security benefit. The extra earnings credits are granted for periods of active duty or active duty for training. (No additional earnings are granted for inactive duty training, and Social Security cannot add extra earnings credits to your earnings record until you file for Social Security benefits.) Here's when the additional earnings are granted: Service In 1978 And Later For every $300 in active duty basic pay, you are credited with an additional $100 in earnings up to a maximum of $1,200 a year. If you enlisted after September 7, 1980, and didn't complete at least 24 months of active duty or your full tour, you may not be able to receive the additional earnings. Check with Social Security for details. Service 1957 Through 1977 You are credited with $300 in additional earnings for each calendar quarter in which you received active duty basic pay. Service 1940 Through 1956 If you were in the military during this period, including attendance at a service academy, you did not pay Social Security taxes. However, your Social Security record may be credited with $160 a month in earnings for military service from September 16, 1940, through December 31, 1956, under the following circumstances: * you were honorably discharged after 90 or more days of service or you were released because of a disability or injury received in the line of duty; or * you are still on active duty; or * you are applying for survivors benefits and the veteran died while on active duty. You CANNOT receive these special earnings credits if you're already receiving a federal benefit based on the same years of service. But there is one exception to this rule: If you were on active duty after 1956, you can still get the special earnings for 1951 through 1956 even if you're receiving a military retirement based on service during that period. APPLYING FOR SOCIAL SECURITY BENEFITS There are many kinds of benefits available from Social Security, including retirement and disability payments, benefits for your dependents, and survivors benefits for members of your family if you should die. There's also Medicare coverage and Supplemental Security Income (SSI) payments. For more information about these benefits, ask Social Security for a copy of the booklet "Understanding The Benefits" (Publication No. 05-10024). When you apply for Social Security benefits, you'll be asked for proof of your military service (DD Form 214), or information regarding your Reserve or National Guard service. IF YOU GET BOTH SOCIAL SECURITY AND MILITARY RETIREMENT You can get both Social Security benefits and military retirement. Generally, there is no offset of Social Security benefits because of your military retirement. You'll get your full Social Security benefit based on your earnings. However, your Social Security benefit may be reduced if you also receive a government pension based on a job in which you didn't pay Social Security taxes. Ask Social Security for a copy of the factsheet "A Pension From Work Not Covered By Social Security" (Publication No. 05-10045). Social Security survivors benefits may affect benefits payable under the optional Department of Defense Survivors Benefit Plan. Check with the Department of Defense or your military retirement advisor for more information. SSI FOR CHILDREN SSI pays monthly benefits to people with low incomes and limited assets. If you have a child who gets SSI, those payments may continue if you're stationed outside the United States (including Puerto Rico and U.S. territories and possessions) while in military service and the child lives with you. Your child must have received SSI the month before you reported for duty. A WORD ABOUT MEDICARE If you have health care protection from the Veterans Administration (VA) or under the CHAMPUS or CHAMPVA program, your health benefits may change or end when you become eligible for Medicare. You should contact the VA, the Department of Defense, or a military health benefits advisor for more information. FOR MORE INFORMATION You can get recorded information about Social Security coverage 24 hours a day by calling Social Security's toll-free number, 1-800-772-1213. You can speak to a service representative between the hours of 7 a.m. and 7 p.m. on business days. Our lines are busiest early in the week and early in the month, so if your business can wait, it's best to call at other times. Whenever you call, have your Social Security number handy. People who are deaf or hard of hearing may call our toll-free TTY number, 1-800-325-0778, between 7 a.m. and 7 p.m. on business days. You also can reach us on the Internet. Type http://www.ssa.gov to access Social Security information. The Social Security Administration treats all calls confidentially whether they're made to our toll-free numbers or to one of our local offices. We also want to ensure that you receive accurate and courteous service. That's why we have a second Social Security representative monitor some incoming and outgoing telephone calls. ---------- A Factsheet from Social Security _______________________________________________________________ Social Security Administration SSA Publication No. 05-10021 January 1997 (Recycle prior editions) Household Workers If you hire someone to work in your home, such as a cleaning person, a cook, a gardener, or a baby sitter, there's important information you (and your employee) should know about paying Social Security and Medicare taxes. Your household employee will be eligible for Social Security and Medicare some day--but only if you deduct Social Security and Medicare taxes from his or her wages, pay the taxes to the Internal Revenue Service (IRS), and report the wages to the Social Security Administration (SSA). When you report those wages and pay the taxes, your employee gets credits toward all available Social Security benefits. Those benefits include retirement and disability payments for the worker, benefits for his or her dependents, survivors benefits when he or she dies, and Medicare coverage. This factsheet provides information you and your household worker need to know about paying Social Security and Medicare taxes and earning Social Security credits. WAGES MUST BE REPORTED If you pay a household worker $1,000 or more in cash wages during a year, you must deduct Social Security and Medicare taxes and report the wages once a year. This includes reporting any cash you pay to cover the cost of the employee's transportation, meals, or lodging. Failure to report the wages on time may mean you'll have to pay a penalty in addition to overdue taxes. ARE ALL HOUSEHOLD WORKERS COVERED? When you pay a household worker $1,000 or more in cash wages during the year, the work is covered by Social Security. How- ever, special rules apply in the following situations: If you run a hotel, rooming house, or boarding house, ALL WAGES YOU PAY EMPLOYEES MUST BE REPORTED, EVEN IF THEY EARN LESS THAN $1,000 DURING THE YEAR. * Earnings for household workers (such as baby sitters) under age 18 are exempt from the Social Security tax unless household employment is the worker's primary occupation. If you hire your child who is 21 or older to perform household work, his or her earnings are covered by Social Security. Household work done by your child who is under age 21 is not covered. Household work performed by your parent may be covered in certain situations. Contact any Social Security office for more information. REPORTING THE WAGES Contact the IRS regarding any necessary reporting requirements or forms. IRS will tell you how to complete forms and when and where to file them. Meanwhile, here are a few highlights you may want to know: * KEEPING RECORDS--For Social Security purposes, you need the name, address, and Social Security number of each household worker and the amount of wages paid. Copy the Social Security number directly from the individual's Social Security card. If an employee does not have a card, he or she should apply for one at any Social Security office. * DEDUCTIONS FOR SOCIAL SECURITY AND MEDICARE TAXES--The 1997 Social Security tax rate, for both employees and employers, is 7.65 percent on wages up to $65,400. Of that rate, 6.2 percent pays for Social Security benefits and 1.45 percent finances Medicare's hospital insurance program. If you pay your employee more than $65,400, you must continue to deduct the Medicare hospital insurance portion of the tax, 1.45 percent, (and pay the same rate yourself) on the rest of the wages you pay the employee. * FILING YOUR REPORT--You use your own federal income tax return (IRS 1040) to report wages over $1,000 that you paid a household worker. As the employer, you pay your share of the Social Security and Medicare taxes, along with the taxes you withheld from the employee's wages, when you file your return. * SUBMITTING A W-2 AFTER YEAR ENDS--You must also give your household employee copies B, C, and 2 of IRS form W-2 (Wage and Tax Statement) by January 31 after the year in which wages were paid. Send copy A to the Social Security Administration by the last day of February. You can obtain this form and the instructions for completing it by contacting any IRS office. HOW YOUR HOUSEHOLD WORKER EARNS CREDIT FOR SOCIAL SECURITY Household work is credited somewhat differently from other work. In 1997, a person earns one credit for each $670 of reported earnings, up to a maximum of four credits for the year. The amount needed for one credit will increase automatically in future years as average wages for all workers increase. However, a household worker will earn Social Security credit only for earnings of at least $1,000 from any employer. For example, a household employee who worked for three employers and was paid $700, $800, and $1,100 respectively (a total of $2,600) would receive only one Social Security credit with $1,100 posted to his or her earnings record. The earnings from the other employers do not have to be reported and are not credited for Social Security because the employee was not paid cash wages of at least $1,000 by either of those employers. How many credits workers (including household workers) need to qualify for Social Security depends on their age and the kind of benefit they might be eligible for. Most people need 40 credits (10 years of work) to qualify for benefits. Younger people need fewer credits to be eligible for disability benefits, or for their family members to be eligible for survivors benefits if they should die. Remember, if you don't report the wages for your employee, he or she may not have enough credit for Social Security benefits, or the amount of the benefit may be less. FOR MORE INFORMATION You can get recorded information about Social Security coverage 24 hours a day, including weekends and holidays, by calling Social Security's toll-free number, 1-800-772-1213. You can speak to a service representative between the hours of 7 a.m. and 7 p.m. on business days. Our lines are busiest early in the week and early in the month, so if your business can wait, it's best to call at other times. Whenever you call, have your Social Security number handy. People who are deaf or hard of hearing may call our toll-free TTY number, 1-800-325-0778, between 7 a.m. and 7 p.m. on business days. You also can reach us on the Internet. Type http://www.ssa.gov to access Social Security information. The Social Security Administration treats all calls confidentially--whether they're made to our toll-free numbers or to one of our local offices. We also want to ensure that you receive accurate and courteous service. That is why we have a second Social Security representative monitor some incoming and outgoing telephone calls. ---------- A Factsheet from Social Security _______________________________________________________________ Social Security Administration SSA Publication No. 05-10051 August 1997 Coverage For State And Local Government Employees How State And Local Government Employees Are Covered State and local government employees are covered by Social Security and Medicare in one of two ways. One way is through a federal-state agreement called a Section 218 agreement. (Such agreements are authorized under Section 218 of the Social Security Act.) Another way is under the mandatory provisions of federal law. Employees hired (or rehired) after March 31, 1986, must have Medicare coverage unless the law specifically excludes them. Employees in continuous employment before April 1, 1986, who are members of a public retirement system, may be covered for Medicare under a Section 218 agreement at the state's option. Another law (effective July 2, 1991) requires state and local government employees not covered by a Section 218 agreement or a public retirement system to be covered by Social Security and Medicare, unless the law specifically excludes them. Employees covered under a Section 218 agreement or by law have the same Social Security coverage and benefit rights as employees in private industry. Why Social Security Coverage Is Important Social Security is more than a retirement program. It can help support your family in the event of your death and provide monthly payments and health insurance when you retire or if you become disabled. Your work history helps you and your family qualify for those benefits because you accumulate credits when you work and pay Social Security taxes. If You Are A State Or Local Government Employee Social Security benefits are based on the earnings reported to the Social Security Administration. Therefore, it's important that you make sure your earnings record is correct. In fact, it's your responsibility to verify the accuracy of the record. You can check your earnings record by completing a Form 7004 (Request for Earnings and Benefit Estimate Statement). The statement provides a year-by-year display of your earnings based on information your employer(s) reported. It also provides an estimate of the retirement, survivors and disability benefits you and your family may be eligible for now and in the future. To obtain the form, call Social Security's toll-free number, 1-800-772-1213, or access http://www.ssa.gov on the Internet. If your earnings statement does not show earnings from a state or local government employer, the work may not have been covered either by a Section 218 agreement or by federal law. You should contact that employer if you have questions about the work. State And Local Government Employer Reporting Requirements State and local government employers are responsible for properly withholding, reporting and paying Social Security and Medicare taxes for employees. Proper reporting allows the Social Security Administration to maintain accurate records and make sure that employees receive correct benefit amounts. Questions related to Social Security and Medicare taxes should be directed to the Internal Revenue Service. Each state has a designated state official (State Social Security Administrator) who is responsible for administering the state's Section 218 agreement. If you have questions about Social Security and Medicare coverage under a state agreement and the reporting requirements, contact your state administrator. To obtain the telephone number for your particular state, refer to the list below. Alabama, 334-242-7066 Alaska, 907-465-4470 Arizona, 602-240-2022 Arkansas, 501-682-7800 California, 916-326-3624 Colorado, 303-620-4432 Connecticut, 860-702-3551 Delaware, 302-739-4208 Florida, 904-488-5540 Georgia, 404-352-6414 Hawaii, 808-586-1700 Idaho, 208-334-2394 Illinois, 217-785-2340 Indiana, 317-233-4116 Iowa, 515-281-0024 Kansas, 913-296-2311 Kentucky, 502-564-3952 Louisiana, 504-342-0026 Maine, 207-287-3455 Maryland, 410-767-4806 Massachusetts, 617-367-7770 Michigan, 517-322-5704 Minnesota, 612-296-7956 Mississippi, 601-359-3589 Missouri, 573-751-4715 Montana, 406-444-3154 Nebraska, 402-471-0621 Nevada, 702-687-4510 New Hampshire, 603-271-4204 New Jersey, 609-292-0132 New Mexico, 505-827-4700 New York, 518-474-1101 North Carolina, 919-733-6555 North Dakota, 701-328-2838 Ohio, 614-466-2942 Oklahoma, 405-521-3555 Oregon, 503-603-7735 Pennsylvania, 717-787-2816 Puerto Rico, 787-723-3585 Rhode Island, 401-277-2287 South Carolina, 803-737-6933 South Dakota, 605-773-3325 Tennessee, 615-741-7902 Texas, 512-867-3373 Utah, 801-538-3095 Vermont, 802-828-2305 Virginia, 804-344-3128 Virgin Islands, 809-774-4750 Washington, 360-438-4856 West Virginia, 304-558-2250 Wisconsin, 608-266-0728 Wyoming, 307-777-6109 For More Information For more information about Social Security, call our toll-free number, 1-800-772-1213, or access http://www.ssa.gov on the Internet. Other publications that may help are "Understanding The Benefits" (Publication No. 05-10024) and "A Pension from Work Not Covered By Social Security" (Publication No. 05-10045)