Federal Insurance Contributions Act (FICA) tax is a United States federal payroll tax imposed on both employees and employers to fund Social Security and Medicare, federal programs that provide benefits for retirees, the disabled, and children of deceased workers.
For 2017, the Social Security tax rate is 6.2% (unchanged) on the first $127,200 wages paid (was $118,500 in 2016). The Medicare tax rate is 1.45% on the first $200,000 and 2.35% above $200,000.
Both employees and employers contribute at the same rate: 7.65%
Self-employed are taxed at a rate of 15.3% on net profits X 0.9235.
If the net profits are less than $400, there is no self employment tax due.
I created this blog to help understand certain basic aspects of U.S. tax law. Of course, each situation is unique and nothing that is on this site will ever replace the expert advice of a tax professional.
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