Every business owner who runs an organization and pays their employees must be aware of the taxes. One of the important taxes is FICA, which includes Social Security and Medicare tax. Let's understand What is FICA and how it affects the employee's paychecks.
Table of Content:
Key Takeways:
- FICA(Federal Insurance Contribution Act)taxes are payroll taxes that combine both Social Security and Medicare taxes.
- Employers and employees must contribute a certain percentage.
- The Social Security tax rate is 6.2% and the Medicare tax rate
is 1.45%. - Self-employees who earn more than $400 should contribute the entire FICA tax on
their own.
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