Social Security and Medicare (FICA) Tax: Who Qualifies and What You Get
Learn how FICA tax works, how it supports retirement and healthcare, and what employers and employees need to know about withholding.
FICA tax is a federal payroll withholding used to fund social security and healthcare programs for retirees and people with disabilities.
Who it's for
This tax applies to all employees. If you are working as an employee, you fall under these requirements.
What you get
The money withheld from your paychecks serves as a standard payroll withholding that supports two major areas: retirement and health. These funds go toward social security benefits and Medicare, which provides healthcare coverage for retirees and those who qualify through disability or age.
What it costs you
The cost is shared between you and your employer. While a portion of your earnings is deducted directly from your paycheck, your employer is required to provide a matching contribution to help fund these programs.
The catch to know
A common mistake is forgetting that these tax obligations apply to more than just your standard hourly or monthly salary. You must ensure that taxes are properly withheld on all forms of compensation, including any extra money earned through tips or one-time bonuses.
How to apply
- Track all employee earnings, including base pay, tips, and bonuses.
- Calculate the correct withholding amounts for each paycheck.
- Ensure the employer's matching contribution is calculated and paid.
- Visit the official portal for more information on employer responsibilities: https://www.ssa.gov/employer