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How Do I Calculate the Amount of FICA Tax Deductions?

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Question: How Do I Calculate the Amount of FICA Tax Deductions?
FICA taxes are taxes for Social Security and Medicare. The FICA tax is shared by employees and employers, so one-half of the tax is deducted from employee paychecks each payday. The other half, an amount equal to the amount deducted from employee paychecks, must be paid by you as an employer.
Answer: To calculate FICA taxes from an employee's paycheck, you will need to know:
  • The amount of gross pay for that pay period
  • The total year-to-date gross pay for that employee
  • The Social Security and Medicare percentages for that year.
The Social Security maximum withholding changes each year. Go to "Social Security Maximum" to find this year's maximum withholding amount.

Doing the Calculations

  • Determine the amount of employee wages/salaries that are subject to FICA taxes. Eliminate any amounts that are not subject to these taxes.
  • For higher-paid employees, double check that the employee's year-to-date wages/salaries are not over the Social Security maximum wages for the year. Any earnings over the maximum are not subject to Social Security.
  • Calculate the Social Security deduction, multiplying the current Social Security tax rate by the amount of gross wages subject to Social Security.
  • Calculate the Medicare deduction, multiplying the current Medicare tax rate by the amount of gross wages subject to Medicare. There is no annual maximum for Medicare.

Employer's Portion of FICA Taxes
After you have completed the FICA tax calculations for all employees, you must set aside an amount equal to the total for your employer portion of the FICA taxes.

Back to Calculating Employee Paycheck Deductions

Back to FICA Taxes Explained

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