Q:

What is FICA withholding?

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Quick Answer

FICA withholding refers to payroll deductions that allow taxpayers to comply with the provisions of the Federal Insurance Contributions Act. According to the Internal Revenue Service, these payroll deductions include two taxes: Social Security and Medicare.

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Full Answer

As of 2014, Social Security tax is withheld at a rate of 12.4 percent. This includes matching contributions of 6.2 percent from both the employer and employee. Medicare tax is deducted at a rate of 2.9 percent. This includes matching contributions of 1.45 percent for both employer and employee. Only wages up to $117,000 per year are subject to Social Security FICA withholding, while taxpayers who are paid more than $200,000 annually are subject to an additional 0.9 percent Medicare tax, according to the IRS.

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Related Questions

  • Q:

    What is the FICA tax rate?

    A:

    FICA, the Federal Insurance Contribution Act, governs collection of two separate taxes: Social Security and Medicare. Most employees have 6.2 percent of their wages withheld for Social Security and 1.45 percent for Medicare, a total of 7.65 percent. Most employers then match the withholding for a total of 15.3 percent.

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  • Q:

    What are some sample paycheck deductions?

    A:

    Typical paycheck deductions include the employee's portion of Social Security and Medicare under the Federal Insurance Contributions Act, known as FICA; federal income tax withholding, based on the employee's W-4 form; and state and local income taxes as applicable, notes SurePayroll.com. Other possible deductions include the employee's portion of medical, dental, vision, life and disability insurance premiums and payments to 401K, retirement or flexible spending accounts. Deductions for union dues and charitable donations are also possible, according to U.S. Trust.

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  • Q:

    What are some tips for filing small business taxes?

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    When filing taxes, small businesses should be diligent in record keeping, evaluate deductions annually, use tax act provisions and tax credits, and avoid IRS auditing traps, advises the U.S. Small Business Administration. Required taxes include income tax, estimated tax, employment tax and excise tax, cautions the Internal Revenue Service.

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  • Q:

    What are some deductions offered to individual taxpayers?

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    Among the deductions that the Internal Revenue Service (IRS) is offering to individual taxpayers include deductible business expenses for work-related deductions, individual retirement account (IRA) payments for deductions on investments and student loan interest payments on education deductions. The amount of all the deductibles should be totaled and then subtracted from a taxpayer's income before his income tax is calculated, notes the IRS website.

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