Before you test the FICA tax calculator on this page, it is better you understand properly “what is a FICA tax ?”. The full form of FICA is Federal Insurance Contribution Act. This is an employee payroll tax that funds social security benefits and Medicare health insurance of the employee. Since the law requires the employer to withhold FICA taxes from the salary/wages of employees, It is considered social security withholding tax. Are FICA taxes Social Security Tax? Yes, because the FICA tax has two parts. The first part is 6.2% of employees’ taxable gross wages is the Social Security Tax part.
FICA tax Calculator
What are FICA tax rates?
FICA tax rate for 2022 is the same for the year 2021. In other words, for both 2022 & 2021, the FICA tax rate is 15.30% which is split equally between the employer and employee. So Employer deducts the FICA tax of 7.65%. (6.2% for Social Security and 1.45% for Medicare) from wages of an employee and deposits, the combined contribution (its own 7.65%) totalling 15.3%.
What is the wage limit for FICA tax?
This social security tax under FICA taxes is only deducted till an employee’s salary or wages reached a maximum wage base limit of $147,000 in the year 2022 .
The aggregate FICA taxes for an employee is capped at $147,000 for the year 2022 which is slightly above $142, 800 fixed for the year 2021 and $137,000 for the year 2020. It means that the maximum social security tax that can be deducted during 2022 from an employee is $9114 .
How to calculate FICA tax?
Calculating FICA taxes contribution for an employee is easy. The aforesaid FICA tax calculator is based on the simple formula of multiplying the gross pay by the Social Security and Medicare tax rates. For example,
- The taxable wages of Mr Richard is $900 for the week
- Employer will deduct social security contribution would be: $900.00 x 6.2% = $55.80.
- Further,deduction for Medicare contribution would be: $900.00 x 1.45%= $13.05.
- So, the total deduction from Mr Richard wages would be $55.80+$13.05= $66.85 .
- The employer would also have to pay equally i.e $66.85 of FICA tax.
Who needs to pay additional Medicare tax ?
The IRS under the Affordable Care Act introduced an Additional Medicare Tax in 2013. This additional Medicare tax is applicable only if the combined earning from Medicare wages and self-employment income exceeds the threshold given below :
Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying widow(er) $200,000
However, the law for withholding additional medicare tax by an employer applies the moment your wages cross $200,000. It means that even if your earning as per your filing status does not cross the threshold if your wages with an employer crosses $200,000, additional medicare tax must be withheld @ 0.9% .
Who Needs to File Form 8959 for Additional Medicare Tax ?
If you are subject to additional medicare tax withholding, you must file Form 8959. In other words, if the employee is getting wages plus tips is more than $200,000 (Refer your W-2).
You must also file Form 8959 if your total Medicare wages and tips plus your self-employment income if any are greater than the threshold amount as per your filing status [refer to the table above]. You can read IRS instruction on form 8959
Is FICA Taxes Paid by Self Employed Persons?
When you’re self-employed, you need to pay the employee tax or the employer tax both. The term used is self-employment tax. In other words, a self-employed person has to pay 12.4% for Social Security Tax and 2.9% for Medicare Tax. And if you’re a high wage earner, you’ll still have to pay the 0.9% Additional Medicare Tax above your earnings threshold. Please read more on a self-employment tax calculator with faqs
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