FICA and Medicare Payroll Tax

• FICA• Stands for Federal Insurance Contribution Act• Provides benefits for retired workers and their dependents• Also provides benefits for disabled workers and their dependents

• Medicare• Government service that provides healthcare for:• Senior Citizens• Disabled U.S. Citizens

FICA and Medicare Payroll Tax

• Who has to pay FICA/Medicare taxes? • All employees must pay this tax except:

1. Any student that works for the school he/she attends2. Foreign diplomats3. Non-resident alien on a temporary visa

FICA and Medicare Payroll Tax

• How are FICA and Medicare taxes calculated• FICA: 6.2% of income paid by employee. 6.2% of income paid by

employer• FICA is capped in 2014 at $117,000

• Medicare: 1.45% of taxable gross• There is no income cap on Medicare