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All About FICA Taxes - Social Security and Medicare Taxes

FICA Withholding, Calculations, Limits

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FICA taxes are those taxes withheld from employees 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.

1. What are FICA Taxes?

FICA taxes are payroll taxes collected from employees and their employers for OASDI (Social Security) and Medicare.  The taxes total 15.3% for employees and are shared by the employees and employers.

2. How Do I Calculate FICA Tax Withholding and Payments?

This article takes you through the process of calculating FICA taxes on an employee's paycheck.  Basically, you take the employee's gross pay (including overtime) and multiply by the appropriate percentages.  You also have to watch to see that the employee's total gross pay for the year does not exceed the Social Security maximum, because you can't deduct more than the maximum Social Security amount each year.

3. What is OASDI (Social Security Tax)?

OASDI stands for Old Age, Survivors, and Disability Income.  It is another name for Social Security.

4. What is the Annual Maximum Social Security Tax?

Each year, the IRS publishes a maximum amount of wages/salaries which are subject to the Social Security portion of FICA taxes. You cannot deduct more than the maximum amount of Social Security tax from an employee's paycheck. 

5. What Wages are NOT Subject to Social Security Taxes?

Some payments to employees are exempt from FICA taxes.  For example, payments to "family employees" (your own children working for you) under 18 are not subject to FICA taxes. Read this article to see the entire list.

6. What if I Deducted Too Much Social Security Tax from an Employee?

Did you deduct too much Social Security tax from an employee? Maybe it was because you kept on deducting above the Social Security maximum.  In any case, you must refund the money.  There are also some other tax reports you may need to correct.

7. How and When Do I Send FICA Taxes to the IRS?

You must send FICA tax deposits, along with amounts withheld from employee pay for federal income tax, to the IRS periodically.  The deposits must be made using the Electronic Federal Tax Payment System (EFTPS) and they are made either semi-weekly or monthly, depending on the average size of deposits for the past year (new businesses deposit monthly).  Read more about how to determine when to make payments for FICA and federal income taxes.

 

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