Federal Insurance Contributions Act

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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.
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References in periodicals archive ?
Quality Stores Update - Federal Insurance Contribution Act
For example, in the United States, PWD's who employ their own aides must maintain Federal Insurance Contribution Act (FICA) tax recording.
According to Internal Revenue Bulletin 1997-9, cash paid in 1997 to a household employee such as a housekeeper is not subject to Federal Insurance Contribution Act taxes if it is less than $1,000.
The Federal Insurance Contribution Act (FICA) and Federal Unemployment Tax Act (FUTA) taxes were collected on certain "make up" pension payments made to retirees by LTV after tax-qualified pension plans were terminated by the Pension Benefit Guaranty Corporation.
And it's no surprise that some play fast and loose with the rules since there is much to be gained by classifying workers as independent contractors--lower Federal Insurance Contribution Act (FICA) taxes, no tax withholding and fewer reports to be filed with various government agencies.
Do you have copies of all the form 940 (federal unemployment taxes) and form 941 (federal taxes and Federal Insurance Contribution Act [FICA]) deposits you made with the federal government?
Revenue ruling 92-106 discusses employers' obligations under the Federal Insurance Contribution Act (FICA) and the Federal Unemployment Tax Act (FUTA), as well as under the income tax withholding provisions.

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