How do I tell the difference between FICA and Social Security on my pay stub?

The self-employed individuals also pay both employer’s and employee’s contributions (i.e., a total of 15.3%) in their own right via self-employment taxation. Meanwhile, Medicare provides critical healthcare coverage for individuals aged 65 and older and for some younger individuals with disabilities. The Medicare tax rate is set at 1.45% for both employees and employers, with additional obligations for higher earners through the Medicare surtax. They pay FICA through what’s called SECA – the Self-Employed Contributions Act.

Official websites use .gov A .gov website belongs to an official government organization in the United States. The credit score provided in CreditWise is a FICO® Score 8 based on TransUnion data. The FICO Score 8 gives you a good sense of your credit health but it may not  be the same score model used by your lender or creditor.

Who Pays FICA Taxes?

A handful of states have enacted disability insurance programs to provide financial assistance to employees who are unable to work due to illnesses or injuries unrelated to their jobs. Payroll taxes take many forms, but every employer should understand how current tax rates affect their people and the places they operate. Specifically, 6.2% of an employee’s FICA taxable wages go to Social Security tax and 1.45% of their gross wages go to Medicare tax. The employer must match these percentages for a grand total of 15.3%.

What Are My Rights as a Taxpayer?

The social security tax rate is 6.2% each for the employee and employer. The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2024. There is no wage base limit for Medicare tax.Social security and Medicare taxes apply to the wages of household workers you pay $2,800 or more in cash wages in 2025.

15-T for more information on how to withhold on periodic payments. On Form W-2, to figure the correct social security tax to enter in box 4, multiply the amount in box 3 by the social security withholding rate of 6.2% and enter the result in box 4. To figure the correct Medicare tax to enter in box 6, multiply the amount in box 5 by the Medicare withholding rate of 1.45% and enter the result in box 6. If two or more related corporations employ the same individual at the same time and pay this individual through a common paymaster that is one of the corporations, the corporations are considered to be a single employer.

They have to pay, in total, no more in social security tax than a single employer would pay. As an alternative, the parties could have followed the optional rule described under Optional rule for Form W-2, earlier in this section. Under this rule, Key would prepare Form W-2 even though liability for the employer part of the social security and Medicare taxes had been shifted to Edgewood.

IRS AI

• If you want to be a traditional employee, you should see a line for FICA taxes and another for Medicare.
• They use bank-level encryption and explicitly state they don’t store your documents after analysis.
• Some high earners are subject to an additional 0.9% Medicare tax.
• You’re not required to withhold federal income tax from wages you pay to a household employee.

Employers are responsible for withholding it once the threshold is crossed, but they do not match it. Once an employee hits the $176,100 wage cap, you no longer withhold Social Security taxes for the rest of the year. The maximum contribution per party comes out to $10,918.20 in 2025.

How You Pay FICA and Medicare Taxes

• No pop-ups or hoverboxes are permitted, and if the electronic system has toggles for those steps that limit the amount of text that is viewable, the toggles must be off as the default.
• According to the Congressional Budget Office, it’s estimated that the Social Security Trust Fund will run out of the money needed to make monthly Social Security payments in 2033.
• Use Form 1099-NEC to report nonemployee compensation paid in 2024.

Roosevelt believed that the money collected from all working Americans through FICA would belong directly to them. He didn’t want the financial benefits for their retirement, disability, or death to depend on federal revenue. He feared that politicians would take and use the money for their own purposes. File Form 843 (with attachments) with the IRS office where your employer’s Forms 941 returns were filed. You can locate the IRS office where your employer files his Form 941 by going to where to file tax returns.

The Form W-8BEN must contain the foreign person’s taxpayer identification number (TIN) to support a withholding exemption. TIN (SSN or individual taxpayer identification number (ITIN)). However, for a claim based on a tax treaty, a foreign TIN may be substituted for a U.S.

Refund of taxes withheld in error

The system can process either format and still gives you the same detailed breakdown.Regarding security, I had the same concerns at first. They use bank-level encryption and explicitly state they don’t store your documents after analysis. Everything Learn About Fica, Social Security, And Medicare Taxes is processed then deleted, and they explain this in their privacy policy. I was hesitant at first but after researching their security measures I felt comfortable using it.

What is FICA (Federal Insurance Contributions Act)?

The Social Security Administration (SSA) has two main functions. The other is to run the Social Security retirement, survivors, and disability insurance programs. A third function is to run the Supplemental Security Income program, for people who are 65 or older, blind, or with a disability. Chen can claim an above-the-line deduction for half of his self-employment tax, or $12,897.90 ($25,795.80 ÷ 2). In effect, he gets a partial refund on the 7.65% employer portion of his self-employment tax (6.2% Social Security + 1.45% Medicare).

Although it may feel like a financial burden as it reduces your paycheck, FICA contributions play a vital role in sustaining programs that might directly benefit you or your loved ones later in life. Understanding this can foster a sense of appreciation for how these deductions work towards a collective safety net. Certain groups, such as some foreign government employees and specific religious groups, may be exempt from FICA taxes. Additionally, students working at their enrolled university may qualify for exemptions. In this instance, any employee who earned $176,100 or more in 2025 would contribute $10,918.20 to Social Security. Remember, the employer must match employee contributions dollar for dollar, so they would also pay $10,918.20 in Social Security taxes.