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What Is FICA?

FICA refers to the Federal Insurance Contributions Act which mandates employers withhold a certain percentage of their employees' salaries each pay period.
Congress passed the Federal Insurance Contributions Act in 1935, mandating employers to withhold a set portion of employees' salary in each pay period.
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  • Originally Written By: Donna Reynolds
  • Revised By: A. Joseph
  • Edited By: Niki Foster
  • Last Modified Date: 28 June 2014
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The Federal Insurance Contributions Act is federal legislation in the United States that mandates employers withhold a set percentage of their employees' salary each pay period. FICA also requires that the employers match the employees' amount and contribute the money to a government account known as the Social Security Trust Fund. This fund provides retirement income, as well as disability insurance, Medicare and benefits for survivors.

History

FICA was the result of the Social Security Act of 1935, which was proposed by U.S. president Franklin D. Roosevelt. The program began collecting taxes and paying benefits in 1937. In 1939, FICA was amended to include widows and orphans of working spouses, as well as elderly people who had not paid into the system.

Originally, Social Security benefits were available only to people who had worked in what was considered commerce and industry. Government employees, medical personnel, lawyers and agricultural workers were all exempt from FICA, and because they were not required to pay into the fund, they could not collect payments from it. These restrictions were lifted, and although there still are categories of workers who can opt out of paying into FICA, no one is expressly excluded from participation.

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Social Security Trust Fund

The Social Security Trust Fund, established in 1939, is responsible for collecting the money that is raised through the employer and employee contributions that are required by FICA. The U.S. Department of the Treasury is responsible for managing these funds and is charged with investing this money in securities that are backed by the U.S. government. The government, in effect, loans the money to itself and then uses it to finance other projects. The money is repaid when the bonds come due.

Benefits

A person can collect reduced Social Security benefits starting at age 62. Distribution of full benefits is determined by an individual's birth year. People who were born before 1938 were able to collect full benefits at 65. For those born between 1938 and 1943, the age increases at a rate of two months per year up to the age of 66 for those born in 1943. As of 2011, the retirement age was 66 for everyone born from 1943-1954, and then it increased again for people who were born from 1955-1959, up to a maximum of age 67 for people who were born in 1960 and after.

Taxes

Originally, Social Security benefits were not taxable. In 1983, however, the U.S. Congress passed amendments to the Social Security Act that would consider 50 percent of benefits to be taxable income for beneficiaries who had a total income that exceeded an established limit. This amount was increased to 85 percent in 1993.

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Discuss this Article

anon326737
Post 57

I am so sick of FICA being taken out of my check! It's making me want to stop working because of this. That's why people don't work. We already have enough taxes coming out of our checks. They are not even taking out federal taxes but they are taking out for FICA. I'm sick of FICA.

anon280440
Post 56

I am having surgery. Is there an disability for short term through the government or state? I live in Idaho.

anon236760
Post 54

As far as I am concerned, US Social Security System is just FICAL matter. It all just goes down the drain!

anon215477
Post 53

On my paycheck I have a deduction for FICA, SS, and MED. I thought FICA was for ss and med, so why am I getting it taken out twice?

anon201017
Post 52

I understand everyone's opinions on this FICA matter which did at one time bother me, but what works for me and always has is that i go to church every sunday and what i do is i pay my tithes, which are 10 percent, and a little extra to the church, and you know what? Honestly, God has provided for me and my family no matter what! My bills being paid on time, there is plenty of food for us, and we even had extra left over.

So i encourage you all to try this out. Find a good bible believing church and start paying 10 percent of your paychecks and see what happens, but when you give, give with an expectation that you are going to receive more than enough from God, for he will open up the windows of heaven and pour out his blessing that your cup will overflow!

anon194531
Post 51

How is it that our social Security Administration can charge us for Medicare insurance coverage since I have been paying Medicare all of my working life--over 40 years. The premiums to Medicare and my state health plan are more than double what I ever paid for insurance coverage while employed full time. Working people are being ripped off by our government while politicians live like fat rats.

anon184775
Post 50

I can understand why widows or widowers who have never received a paycheck, should receive social security when their spouses die, but why do so many of my wealthy female acquaintances, who never worked out of the home, receive social security along with their husbands, who brought home the paycheck?

Also, I was working full time when my husband died at the age of 47 and received Social Security benefits for my 12 year old son. My friend lost her husband at age 42 and was left with three children. She not only received Social Security for each child, but a mother's portion because she didn't work. Her husband made a six figure salary and left her $400,000 in life insurance. My late husband made a five figure salary and left me with a $150,000 life insurance. I questioned the Social Security office and they told me that if I either quit my job or went part-time, I would receive the mother's portion. This all seems so unfair to me.

anon149533
Post 49

Moot point when the money is gone. I have been working all my life to make ends meet. Now I have to do with less because of tax hikes and gas prices. We have too many free loaders in America.

I would have been better off sticking my FICA money in the bank then letting the government get a hold of it. Wake up America. We give and give but never receive. I get tired of paying for those who don't try to work. Oh! Don't even get me started!

anon131953
Post 48

I have been working for a company and I have just saw that they are not taking any FICA out of my check! what should I do? it's been a few years now!!

anon131930
Post 47

An employer never "matches" your contribution. An employer has a business plan. It tells him how much he can afford, to have you in your position, and the business still be a success. The employer's contribution is "your money". He'd as readily pay it to you as to the feds. I was an employer for many years, believe me, I know, Some "wise" person decided that if it were paid to you, "you'd just waste it.” He may have been correct but are you willing to have him make that decision about you? --Robert G.

anon118582
Post 46

One big problem for Social Security right now is that millions of jobs have been offshored and their FICA taxes are gone. Also, many of the good jobs that were done in manufacturing are now being done by robotics, again the FICA taxes that would have been collected from actual living workers are gone.

The government has to stop the drain of good paying jobs being sent elsewhere or find another way to help fund Social Security. The young people today are in trouble when it comes to retirement planning. Since Reagan started breaking up unions and thereby their pension funds, and Government privatizing good jobs and employees losing their pension, younger workers are going to have to rely on 401K's controlled by Wall Street bankers for their retirement. I do not envy them!

anon113496
Post 45

@anon104923 (post number 44) You are so full of it. "The Democrats have borrowed...". Are you kidding me?

Obviously you're a Republican so I'll keep this simple - your beloved Ronald St. Reagan, a Republican, doubled the amount of FICA taxes being taken out of everyone's paycheck specifically so he could borrow from it to fund his failed Star Wars defense program.

Think the GOP doesn't like to tax? Why do you think George H.W. Bush ran on "read my lips, no new taxes" and then raised taxes?

As for PERS: that's only available at the state level. Members of Congress receive retirement and health benefits under the same plans available to other federal employees. They become vested after five years of full participation.

anon104923
Post 44

The Democrats have "borrowed" billions of dollars from the Social Security Trust Fund and never paid any of it back. That is why the Social Security benefits (payments) are going to run out!

And then think these idiots are even considering allowing illegal aliens to collect Social Security benefits. The politicians have their own (safe and separate) retirement system called PERS (Public Employee Retirement System).

Why don't they give theirs away?

anon102194
Post 41

FICA has nothing to do Social Security - it's just another income tax, according to the Supreme Court. Read "Income Tax: Shattering the myths."

anon93933
Post 40

An employee of mine is getting temporary state disability permits, and i was told as employer i must deduct fica and fit taxes. However the statement i received from the state (third party) is confusing because it says they are considered the employer.

I deducted these taxes when the person was working, and I need to know "if" and "how" I deduct these taxes if the employee is on disability?

anon77493
Post 39

Why are people raging over the health care issue, when the bill only proposes coverage of 32 million, yet we pay social security and FICA that we (early 20s generation) will never see, and that affects hundreds of millions.

anon72199
Post 37

While a student in Michigan in the late sixties, I worked part-time for various employers who withheld FICA tax.

In Sept 69 I began a teaching career in Canada and have not earned any wages in the US since my student years. I am a Canadian citizen and do not expect any ssi benefits during my retirement. However, I would like to recover payments made to the US social security system.

What are the rules governing refunds? Does it depend on levels of the amounts contributed? Or on the number of years that I contributed?

anon71499
Post 36

maybe it is that i am young, or maybe stupid, but my question is this: If i already pay Social Security taxes, why do i need to pay an additional tax named FICA for the very same benefit?

The Social Security Benefits form i receive annually states that by the time i retire, Social Security benefits will be exhausted. If that's the case, why deduct money from my paycheck for a benefit that will cease to exist by the time i retire? it would seem to me that if the benefits will not be there at the time i retire, why not leave my money in my paycheck to do as i see fit?

so it would seem to me that we as tax paying citizens are paying twice for a single benefit that i will not, nor anyone my age, will ever see.

Stand up, America. Fight for your rights. fight for your hard-earned dollars. Don't be the stooge they want you to be.

anon65913
Post 35

I am a substitute teacher in Osceola County, Florida. My employer is taking medical insurance from my pay, but would not take FICA. Is this legal since FICA is mandatory?

anon65032
Post 34

I am 47 years old and a full time student. I lost my job and don't have any unemployment benefits. If I am a full time student without a job, can I apply for any benefits in New York? I know about the insurance. Do you know of any additional benefits in New York? Thank you to all, Luka

anon60203
Post 33

We are giving our employees' medical insurance. how do i deduct this from their check and do they pay taxes on this medical insurance.

anon44761
Post 32

Is fica based on Gross Earnings or Taxable gross earnings. My taxable earnings is after my insurance deductions.

anon44489
Post 31

Pelanie, in repsonse to your reply you stated "Each company that you work for is required, by law, to withhold applicable FICA taxes from your pay". Can you tell me what year that law went into affect.

anon44217
Post 30

I'm 48 years old and have been working since age 13 consistently. Up to age 18, OASID was deducted from my pay checks. Thereafter, FICA along with Medicare, Social Security, Federal and State taxes are being taken out. What happen to OASID and is my employer taking out too much? How do I calculate my tax rate from all these taxes?

anon44004
Post 29

Can your employer list their FICA contribution as one of your benefits?

anon44002
Post 28

My employer lists FICA as a "benefit" (i.e. benefits are FICA, medical insurance, parking, etc.). Since the employer's portion of FICA is a required tax, can it be considered a benefit?

anon41673
Post 27

I was recently dismissed from my job. I received my last pay check that reflected a large amount of fica taken out. The company still owes me a severance pay which will be paid bi-weekly. Does the company still have a duty to take out fica if i am only getting my severance money?

anon40723
Post 25

my wife just started a new job on an indian reservation. Her employer has not taken out FICA tax from her first checks. We are concerned about this. will we have to pay more at the end of the year? and isn't the company supposed to have FICA taken out?

anon38747
Post 24

Is FICA federal income tax withheld or is it just social security/medicare payments withheld? My husband's new job I show is only deducting FICA, Medicare & state. I do not show Federal is FICA federal? Please help. I'm completely confused.

azchica
Post 23

My employer continued to pay my wages while I was off work (maternity leave) with the agreement that I would reimburse them by repaying the amount of the benefit that I received from my voluntary short term disability insurance (of which I pay the premiums for - after taxes). I received a check from the insurance co for the 5 weeks of disability less FICA. I reimbursed my employer the *net* amount of my benefit check; however, now they are telling me that I should reimburse them for the *gross* amount since they already paid the FICA on my behalf. Does this make sense?

pelaine
Post 22

Hello Anon225

Each company that you work for is required, by law, to withhold applicable FICA taxes from your pay. Unlike Federal and State taxes, in which you can claim "exempt" from paying on your paycheck, FICA tax is "mandatory". It doesn't matter how many jobs you have held in one year and how much you have earned from each place of business. Each company you work for is required by law to withhold Social Security taxes(The maximum taxable amount per job in 2009 is $106,800.00)at a rate of 6.2%! Medicare tax, which is 1.45%, is indefinite, meaning there is no limit set for the deduction to end within a given year. The *only* thing you can do is claim it on your taxes to get the money back in the following year. I know the system sux in a way, but payroll professionals must(I'm a payroll professional myself) follow the laws that are set fourth in this country when it comes to deducting FICA taxes from each and every employee.

Hope this helps.

sabi1
Post 21

I am a contracted full time employee for a company in NY,(I reside in Fl.). My employer deducted NY State taxes on my w-2, did not make FICA deductions/payments hasn't paid my expenses for the tune of over 32K and as I have not worked in 38 days due to a work related injury now will not disclose worker's comp. policy.

I feel they don't have worker's comp ins. and are just jerking me around. As for the FICA they calculated the money and want me to pay them in full. I do not have the money and they threaten to garnish my paycheck.

I have filed with the IRS and my acct. said that I will definitely be visited for audit purposes on my taxes for the next few years. I needed a corrected w-2 to correct my taxes but they are stalling.

Any suggestions? thanks

anon22484
Post 20

how much is the FICA % ?

anon21378
Post 19

Im considered a born abroad american, by virtue of being born in Montreal, w/a Canadian mother, & american father, who because they married after my birth, had to legally adopt me. when I turned 62, & filed for my ss benefits, after working & paying into the system for 35 years, Social Sec. office made me prove my citizenship (via father), with endless documents, & an immigration fee of over $800. Since my father was deceased, I was lucky my sister & step mother had lots of documents re: my fathers life, service records, etc. If I couldnt have produced the right docs, Id have been denied my SS $ ..from a system I paid into for 35 years! so, if your father was american, & you were born abroad,,watch out! get your docs together now...dont wait for a parent to pass....I tell everyone this story in hopes it will help someone else. No one told me I would have to do this before I filed!!! certainly not Social Security!

bobkat0142
Post 18

I had to have surgery 2 times for a job related injury. During that time I paid FICA taxes on my salary...was that correct? I did not use my personal sick time and workers comp for the school district paid my medical bills. I have been told that I should not have paid into FICA taxes while out on a line of work injury. If this is so, how would I go about, if possible, to get a refund?

anon18600
Post 17

So I may be confused. I am a full time student so i can only reasonably work a part time job which entitles me to no benefits. I am no longer on my parents insurance so i have no insurance because i can not afford it. If i were to get cancer or some debilitating disease would i be covered by the FICA that I have been paying into for the past 7 years?

Moderator's reply: It is difficult to get health insurance when you're too old to be on your parents' coverage, and haven't graduated college yet. I would suggest contacting your college's health center or student services department and inquire about student health insurance which covers you in the event of accident or major illness. Student insurance is typically fairly affordable and can be paid with financial aid. Another suggestion is to contact your auto insurance agent and see if he or she sells short term health insurance. You can usually get this type of insurance for a couple of years, and it is very affordable. Check out our article, What is Short-Term Health Insurance? for more information. Good luck!

anon17140
Post 16

anon 225 - All employers have to take out FICA. When tax time comes, you claim the excess withholding as a credit on the back of the 1040 in the Tax Credits section. Instructions with the 1040 are actually very good on this one.

EQoverIQ
Post 15

hiddenfood: i'd go on the irs website and run a search for "Aliens Employed in the U.S. – Social Security Taxes." it lists all the different visas that are excluded from social security taxes in the U.S.

hiddenfood
Post 14

I am a foreign student who attended the "summer work & travel program in billings, MT, US. I will just stay in US for about 2 month, now i'm doing some housekeeping work in a inn. I wonder if I need to pay the FICA tax too? because some other students who attended the same program as me dont. Whats more, I definitely will not receive the benefit of this. looking forward to your answer. Thanks a lot!

anon15074
Post 13

In my current job I receive a bonus, which is calculated by taking 2 times my salary and 2 times my benefits and I receive a percentage of money over that amount. My employer is counting their FICA contribution as a "benefit" and multiplying that amount by 2. In essence, I am paying my employer back twice for their FICA contribution. Is this legal? Thanks!

lbell
Post 11

No that is not legal. Your employer should be withholding 6.2% for social security and 1.49% for Medicare. Then they need pay matching amounts to total 15.3%. And they should do that after reporting your income. To report tax fraud to the IRS fill out Form 3949-A available on irs.gov and mail it to Internal Revenue Service

Fresno, CA 93888.

anon12019
Post 10

My employer currently takes out what they (as employers) are being charged for FICA. They take this percentage out before reporting our income to payroll. Is this legal and/or ethical? It seems they are getting away without paying employer taxes while we (as employees) are being unfairly taxed. Suggestions?

lbell
Post 9

Your current employer should make adjustments to the amount of Social Security tax they withhold. If they don't you can submit Form 843 (available at the IRS's website) to get a refund. You can't claim it as a credit on your income tax though.

The company that you worked for, for 8 years is liable to pay the FICA taxes that they should have all those years. They can ask you to pay your half that they did not withhold, but technically you don't have to. In order to make them pay you will probably have to get a lawyer.

If you are self employed or have a small business you will have to pay FICA taxes. It is called self employment tax. There is an article on this website about it.

You still have to pay FICA taxes even if you are currently collecting social security benefits.

I don't know of any way to get any type of refund for FICA taxes for a deceased relative. You can get survivor benefits if you are the dependent or spouse of the deceased person.

I could not agree more with the statement that we are being taxed too much. I do not enjoy paying for all the people who don't feel like working. And I don't like how the government seems to waste money on useless things.

cpowell
Post 8

I feel that it is a shame that we as working Americans are being taxed for everything that we do. They claim that the economy is failing, but as a government you are making it so by taking the hard earned earnings from the people to pay for them to retire or not to be able to retire on the money that we contribute during our lifetime of working. We are taxed to put into these funds and also taxed to get any of it back.

That is a double, no triple standard because even at the end of the tax year we are taxed again on the earnings that we have made and paid during the year.

So why is it that we as people are being charged for everything that we do?

anon6890
Post 7

I recently heard a financial expert on a television show say that if an individual dies before they are able to receive the FICA related benefits, for which they had funds taken out of their paycheck for while they were alive they, their heirs could apply to receive a refund of sorts for their deceased relative's contributions. Is this accurate?

anon6448
Post 6

I was born in 1980, so I'm pretty much guaranteed to die before I ever see a penny of Social Security. I thought retirement was for relaxing after many years of hard work and dedication to the future economic success of our nation. With the increasing age requirements, I will only be able to use social security to pay for my funeral. Not only did I serve in the U.S. Navy, but the government takes a LARGE percent of my pay every day. I'm starting to feel that the costs outweigh the benefits. They should decrease the age requirement so that people will be able to enjoy retirement.

anon5266
Post 5

I have a day job which my company had take out FICA tax in every pay check. I am thinking about have a business on the side or do a day trade on stock or trade on forex exchange.....Do I have to pay more on FICA...separate from my day job? What is the rule on these matters? Vat Thongsiri

anon3930
Post 4

The money you are getting now is SURELY more than you have contributed (or has the potential to surpass that amount) You absolutely should contribute. Uncle Sam had no business getting into retirement in the first place, and now that they did, of course it is set on a disastrous course. By the time the consequences hit, you'll be gone and others will be left holding the bag. Do the right thing.

anon3889
Post 3

I am 75 years young and have been receiving social security since the age of 62. i am now considering taking a part time retail position. Can I justifiably request that FICA be NOT TAKEN OUT?

anon3090
Post 2

I worked for a company for 10 years. Unknown to me, they did not take out FICA taxes for 8 of those years, when questioned in latter years they alluded that we were independent contractors. We were NOT independent contractors and never hired as such! The work was done daily at their office using their equipment, time cards/clocks, etc. and we were referred to as full time employees. We had no knowledge of the consequences of the company's actions. How can we recoup our monies rightly earned through Social Security retirement benefits and make the employer accountable?!

anon225
Post 1

I am receiving severance from previous employer, and will max out my contribution when I receive it. I contacted my new employer in an effort to get them to NOT take out FICA, but they told me they HAD to. Thus, I will be paying too much. How do I resolve this now, or do I have to wait for a refund next year?

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