FICA


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Related to FICA: Social Security, FICO score, Federal income tax, Payroll taxes

Federal Insurance Contributions Act

Legislation in the United States that requires employees to contribute a certain percentage of their wages or salaries via payroll deductions to finance Medicare and Social Security. Employees are required to contribute 6.2% of each paycheck toward Social Security, up to a certain income limit. They are also required to pay 1.45% to pay for Medicare, with no income limit. Employers are required to make matching contributions for each employee. Under the Federal Insurance Contributions Act, employees do not actually receive this percentage of their wages or salaries. Proponents of the Act argue that that this allows employees to budget their taxes better while critics state that the tax is regressive. See also: FICA Tax.

Federal Insurance Contributions Act (FICA).

The Federal Insurance Contribution Act (FICA) is the federal law that requires employers to withhold 6.2% from their employees' paychecks, up to an annual earnings cap.

Employers must match employee withholding and deposit the combined amount in designated government accounts.

These taxes provide a variety of benefits to qualifying workers and their families through the program known as Social Security. Retirement income is the largest benefit that FICA withholding supports, but the money also funds disability insurance and survivor benefits.

Under this act, an additional 1.45% is withheld, and matched by the employer, to pay for Medicare, which provides health insurance for qualifying disabled workers and people 65 and older. There's no earnings cap for this tax.

If you're self-employed, you pay FICA taxes as both employer and employee, or 15.3%.

FICA (Federal Insurance Contributions Act)

The law that provides for social security and Medicare benefits. This program is financed by payroll taxes imposed equally on the employer and the employee. See our Social Securty Wages and Earnings Base for the current wage base.
References in periodicals archive ?
The Supreme Court reversed the Sixth Circuit and held that severance payments to employees who were involuntarily terminated were taxable wages for FICA purposes.
65 percent in severance costs from FICA payroll tax savings on the separation payments and federal and state unemployment tax savings of about 3 percent, depending on the state, the employer's experience rating, and the time of year the reduction in force occurs.
In addition to the FICA payroll tax exemption, employers will receive a general business tax credit for every "qualified employee" the employer retains for at least 52 consecutive weeks.
In 1990, Congress amended the Internal Revenue Code (IRC) and the Social Security Act, making Social Security and Medicare coverage mandatory for most state and local government employees who were not covered by a qualifying FICA replacement public retirement system or a Section 218 agreement.
18) Assuming the calendar year is still open, the employee's share of FICA taxes could be collected from the employee's remuneration when he returns from active duty.
Clinton's plan to make currently exempt employees pay FICA taxes will seriously weaken the financial health of the exempt plans.
Beginning in 1995, a person who is under the age of 18 for any part of the year will not be subject to FICA taxes on domestic services performed in a private home of the employer unless the individual's principal occupation is domestic service.
Best expects ongoing market competition will remain to be a challenge for FICA to sustain its business growth in the near term.
FICA is not a member of the FDIC, but the banks in which money is deposited are FDIC members.
In a statement, FICA Executive Chairman Paul Marsh alleges that there has been 'no action for six weeks' on the FICA complaint about the vote for players representatives on the ICC Cricket Committee.
The Sixth Circuit held that supplemental unemployment compensation benefit payments were not wages for FICA purposes and therefore not subject to FICA.