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2015 Social Security Wage Base Information

The Social Security wage base for 2015 is $118,500.

The Social Security tax rate is 6.2% each for the employee and employer. The Medicare tax rate is 1.45% each for the employee and employer. There is no wage base limit for Medicare tax. 

Employee vs. Independent Contractors – Tax Treatment

A worker’s relationship with the University or hiring organization determines how compensation is taxed. It critical that the University correctly determine whether the individuals providing services are employees or independent contractors. Generally, the Universtiy must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee.

Generally, the University do not have to withhold or pay any taxes on payments to independent contractors.

Before the University can determine how to treat payments for services, the University must first know the business relationship that exists between the Univeristy and the person performing the services. For more information, see Contract Employee vs. Independent Contractor.

Employees –

An employee is an individual who performs a service for the University and is working under the direction and control of the University or its employees. Direction and control can be implied to exist when the employer has the right to control the results as well as the means and methods of the worker.

Generally, the employer must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. Student employees are exempt from FICA.

Independent Contractors –

An independent contractor is an individual engaged by the University to perform a specific function or task, and who is free to perform this function or task at the individual’s own discretion with regard to means and methods.

The University does not have to withhold or pay any taxes on payments to independent contractors. For more informaiton on independent contractors, see Business and Finance Bulletin 77 (BUS 77).

Departments must consult Purchasing Department​ when engaging an independent contractor.

 

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