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Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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# How to calculate FICA?

### Resolved Question:

How do I calculate FICA for - 1) W2 employee who earned \$75K, (Is it 7.65% x \$75K?) and 2) A self employed person who earned \$125K \$102K x 12.4% and \$125K x2.9%?

Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.

Could you please clarify what tax year this pertains to? There are different income limits that the FICA applies to in any one tax year.

Customer: replied 7 years ago.

This is 2008 tax year.

Expert:  Merlo replied 7 years ago.

2008 tax year, a maximum of \$102,000 is subject to social security taxes. There is no limit on the amount that Medicare taxes apply to.

The FICA taxes year 2008 are 6.2% for social security tax and 1.45% for Medicare tax. These taxes are paid by both the employee and the employer.

employee with a salary of \$75,000, his combined FICA taxes are \$5,737.50. (\$75,000 X 7.65%). The employer would make the same matching contribution.

When a person is self employed, they must pay both the employee and the employer share of these taxes. So the FICA tax self employed person is 12.4% security and 2.9% .

If a self employed person earns \$125,000, he pays social security tax only on the limit of \$102,000. So his SS tax is \$12,648.00 - (\$102,000 X 12.4%). He then also owes Medicare tax on the entire income of \$125,000 total of \$3,625 (\$125,000 X 2.9%). His total FICA taxes are then \$16,273.00.

Thank you.

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad

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