How to Compute FICA Taxes

Federal Insurance and Contributions Act, or FICA, taxes include Social Security and Medicare contributions. Both employer and employee contribute to pay FICA taxes. Employees pay FICA taxes via payroll deductions. While for decades, employer and employee made equal FICA contributions, the employee contribution was reduced temporarily in 2011, and that reduction was later extended through the end of 2012. Only the first $110,100 of gross pay is subject to Social Security tax as of 2012. There is no income limit for Medicare taxation. FICA tax rates are subject to revision.

For Employees

Step 1

Find the current Social Security and Medicare tax rates for employees by consulting Internal Revenue Service Publication 15 or the Social Security Administration website. (You can find IRS publications online or request them by mail from the IRS.) As of 2012, employees pay 4.2 percent of their gross income to support Social Security and 1.45 percent for Medicare.

Step 2

Convert the percentage figures to decimals by dividing each by 100. The decimal figures here are .042 and .0145.

Step 3

Multiply the gross pay amount by each of the decimal figures. Say, for example, an employee earns $2,000 in a pay period. Multiply .042 times $2,000 to arrive at $84. Then multiply .0145 times $2,000 to get $29.

Step 4

Add the resulting figures to arrive at the FICA tax for employees. Here, $84 plus $29 equals $113.

For Employers

Step 1

Look up the Social Security and Medicare tax rates for employers by consulting IRS Publication 15 or the Social Security Administration website. As of 2012, employers pay 6.2 percent of an employee's gross income for Social Security and 1.45 percent for Medicare.

Step 2

Convert the percentage figures to decimals by dividing each by 100. The decimal figures here are .062 and .0145.

Step 3

Multiply the employee's gross pay amount by each of the decimal figures. Say, for example, the employee earns $2,000 in a pay period. Multiply .062 times $2,000 to arrive at $124. Then multiply .0145 times $2,000 to get $29.

Step 4

Add the two resulting figures to arrive at the FICA tax for the employer. In this example, $124 plus $29 equals $153.

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About the Author

D. Laverne O'Neal, an Ivy League graduate, published her first article in 1997. A former theater, dance and music critic for such publications as the "Oakland Tribune" and Gannett Newspapers, she started her Web-writing career during the dot-com heyday. O'Neal also translates and edits French and Spanish. Her strongest interests are the performing arts, design, food, health, personal finance and personal growth.

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