What Social Security Obligations Do Employers In The United States Have - Aspirock Wherever your business establishes a presence in the world, you can generally expect to be subject to certain obligations with regard to payroll, taxes, and social security, to cite just a few areas of concern. It is the latter that we will focus on in this article. With the United States being a tricky market for many overseas entrepreneurs to crack, if you are attempting to do the same, you will not want to make your task harder than it needs to be. Almost 200 million people in the US work in roles that are covered by social security. It provides a vital financial safety net for the country’s workers who may be retiring or who find themselves unable to work. If, then, you do put in place foundations as an employer in the US, you will need to ensure you understand how the social security program works, in addition to paying the taxes associated with it. In the event of your organization falling out of compliance – for example, failing to pay the proper social security contributions – you could be penalized by the Inland Revenue Service (IRS). So, let’s take a look at some of the most important things for US employers to know on this subject, including businesses that may be expanding into the country from elsewhere. What is the current US social security rate, and how is it calculated? As of the 2024 tax year, the social security rate in the US is 6.2% of employee compensation each for employer and employee, for a total of 12.4%. The social security tax rate for selfemployed people is 12.4%. So, for an employee in the US who earns $60,000 a year, the social security bill would be 12.4 divided by 100, multiplied by 60,000, equals $7,440. The employer and the employee would pay $3,720 each in this scenario. An employee is only liable for social security contributions on the initial $168,600 of their yearly salary. As a consequence of this, in accordance with current rates, a US employer is not able to deduct more than $10,453.20 from any given employee’s paycheck for social security. Who needs to pay social security contributions?
Almost all employees based in the US – and therefore their employers – are obliged to make payments to the social security program. Anyone who works in the US is subject to this, irrespective of their nationality. Furthermore, even employees that won’t be eligible to receive social security must still make contributions to it. There are, however, some small exceptions to this requirement:
Members of certain religious groups who are formally opposed to social security Students working for the same school at which they are enrolled Certain non-resident aliens, depending on the type of visa they have Employees of foreign governments
How does an employer pay social security contributions? An employer in the US is required to withhold their employee’s 6.2% contribution from their paycheck, in addition to paying the further (employer) contribution of 6.2%. This must be followed by the employer depositing both contributions to the IRS. Although paying social security through the mail is possible, the IRS recommends the use of an electronic payment method. Make Aspirock your business’s EOR to benefit from local compliance support in the US Instead of having to do your own work as an employer to keep on top of all the latest obligations with regard to social security contributions, why not consider engaging the services of an Employer of Record (EOR), which can assume responsibility for this aspect of your operations? This path might make particular sense if you are an entrepreneur or business owner from outside the US and might only be hiring a relatively small number of US-based workers. However, there are also other circumstances in which you may benefit from this form of targeted, local compliance support – for example, if the US personnel you take on will be relatively short-term. To learn more about our services as an EOR at Aspirock, and how we can help simplify your global payroll and social security obligations, please contact us.
