Understanding FICA (Social Security and Medicare) Taxes

FICA taxes - irs payroll taxes

Federal Insurance Contribution Act (FICA) taxes are a type of IRS payroll taxes that comprise of Social Security and Medicare taxes. The government uses these taxes to fund its Social Security and Medicare programs. Both, the employer and employee, are required to pay the FICA payroll taxes. An employer must withhold the tax amount from employee incomes (wages), even if an employee does not expect to qualify for Medicare or Social Security benefits. FICA taxes apply to any employee or employer in the US, regardless of their citizenship or original residence. Let’s learn a bit more about the IRS payroll taxes in this blog post.

Must Read : – How To Pay Payroll Taxes To The IRS

Determining Amount of FICA taxes

The total FICA taxes for an individual and employer is 15.3 percent, which means each employee and employer are accountable for 7.65 percent of the tax. Employers must withhold the 7.65 percent amount from employees’ gross pay. The Social Security portion is 6.2 percent, whereas the Medicare portion is 1.45 percent, which must be paid to the IRS.

Must Read : The Law, Costs, and Benefits of Payroll Taxes for Employers

Payments Not Subject to FICA taxes

There are more than a few payments not to be included when calculating FICA taxes. These include:

  • Tips of less than $20 a month
  • Certain disabled worker wages the employee received after the year they started receiving disability insurance.
  • Family employees less than 18 years of age
  • Payments for workers compensation
  • Payments received by statutory non-employees
  • Employee insurance

Getting Refunds for FICA Taxes Withheld by Mistake

If your employer withholds taxes from your wages that are not subject to these taxes, ask for a refund. If they are unable or not willing to help, fill the Form 843, Claim for Refund and Request for Abatement to file a complaint with the IRS, or speak to an experienced tax attorney.

Paying FICA Taxes

Employers must pay FICA, federal, and state taxes to the IRS from time to time. They must deposit the payroll taxes through the Electronic Federal Tax Payment System (EFTPS), on a monthly or semi-weekly basis. These tax payments depend on the size of previous year deposits. To learn more about how to pay these payroll taxes, call our office at (972) 627-4707.

Wrapping Up

There are many other facts related to FICA taxes and on how employers pay these payroll taxes to the IRS. Whether you are an employer who needs to know how to calculate FICA and other IRS payroll taxes, or an employee looking to get a refund of taxes withheld in error, The Law Offices of Nick Nemeth can help.  If you have IRS tax debt call us at (972) 426-2553 to schedule a free no-obligation consultation today. You may also get in touch with us by filling out our contact form.

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