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How to calculate FICA?

Customer Question
How do I calculate FICA...

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: 8 years ago.Category: Tax
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Answered in 2 minutes by:
3/23/2009
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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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.

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Customer reply replied 8 years ago

This is 2008 tax year.

Tax Professional: Merlo, Accountant replied 8 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
Merlo, Accountant
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