The FICA tax deduction is made up of both Social Security Tax and Medicare Tax.
The federal insurance contribution tax (FICA) is the money removed from the employee’s paycheck to finance social security and Medicare programs.
<h2>Further Explanation</h2>
The FICA tax is imposed on employees and employers by the law of the United States to take care of social security treatment and Medicare of older American citizens. Also, part of the reason the money is removed from employee paycheck is to fund various federal programs meant to take care of people with disabilities and children of workers that have died.
The amount of money removed from your paycheck in your entire working career is what you receive as social security benefits when you retire or what the families of a dead worker receive.
Both workers and employees are mandated to pay FICA tax and it is 7.5% of what you earn if it is up to $127,200. Also, 6.7% of employees’ earnings are deducted for social security retirement benefits while the employer also pays a tax that is equal to the amount deducted from the employees earning.
Also, a self-employed person pays 15.3% of their net incomes.
Therefore, The FICA tax deduction is made up of both Social Security Tax and Medicare Tax.
LEARN MORE:
KEYWORDS:
- FICA tax deduction
- medicare
- social security benefits
- united states
- paychecks
