There are certain taxes on income that everyone has to pay, and FICA taxes are at the top of the list. And employers must withhold these taxes from employee paychecks and pay them to the Internal Revenue Service (IRS). FICA taxes are the Social Security and Medicare taxes paid by individuals and employers. FICA taxes are called payroll taxes because they are based on the amounts paid to employees.
FICA taxes have two elements. withheld from employee paychecks and paid by employees and employers for (1) Social Security (OASDI) and (2) Medicare. This article gives you information about how to calculate FICA taxes, how to report and pay these taxes, what earnings are not part of FICA taxes, and more.
The term FICA is short for the Federal Insurance Contributions Act. The act was introduced in the 1930s to pay for Social Security; Medicare was added later.
The Breakdown of FICA Tax
The total FICA tax is 15.3%. That percentage is applied to the employee's gross pay. The employer and employee each pay 7.65%. Here is a breakdown of these taxes:
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