FICA, an acronym that stands for Federal Insurance Contributions Act, is a federally imposed payroll tax used to fund Social Security retirement, survivors, disability and hospital insurance.
The FICA tax is a combination of Social Security and Medicare taxes. You and your employer pay equal amounts of the FICA tax, which amounts to 15.3%. The portion of FICA tax that goes to Social Security equals 12.4%, with you and your employer each paying 6.2%. The Medicare portion of the FICA tax is 2.9%. Your employer pays 1.45% for Medicare and another 1.45% is withheld from your paycheck.
Employers are responsible for filing FICA reports, making payment deposits according to a set timetable, and providing employees with W-2 forms to document the dollar amount withheld from paychecks for FICA contributions.
If you are self-employed, you pay the entire 15.3% yourself, when you file your Federal tax return at the end of the year. The tax for the self-employed, however, is not imposed by the Federal Insurance Contributions Act, but by the Self-Employment Contributions Act of 1954.
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