Dec 10, 2019 · Social Security tax rates remained under 3% for employees and employers until the end of 1959. Medicare tax rates rose from 0.35% in 1966 (when they were first implemented) to 1.35% in 1985. For the past couple of decades, however, FICA tax rates have remained consistent.
As in 2018, wages paid in excess of $200,000 in 2019 will be subject to an extra 0.9% Medicare tax withholding that will only be withheld from employees' wages as employers do not pay the extra tax. The Federal Insurance Contributions Act (FICA) tax rate, which is the combined Social Security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% for 2019 up to the Social Security wage base.
What Is the FICA Tax, and Why Do I Have to Pay It? This required-by-law tax withholding ensures that two of the nation's most important programs for seniors get funding. This added tax raises the wage earner's Medicare portion of FICA on compensation above the threshold amounts to 2.35 percent; the employer-paid portion of the Medicare tax on these amounts remains at 1.45 percent. The additional Medicare tax should not be confused with the alternative minimum tax on high incomes,... If you're an employee, then you pay one half of this total (probably as a withholding on your paycheck); your employer pays the other half for you (and then gets a deduction for their half on their corporate tax return, since it's an expense - for them it's as if the FICA "half" is an additional piece of salary).
Withholding accounts -- as liability and not expense accounts -- figure into total liabilities, which appear on the company's balance sheet, one of several financial statements generated each month. They are also combined into the amount of the liabilities listed on the shareholder's equity financial statement. FICA taxes are withheld by the employer and are deposited along with federal income taxes in a financial institution. Voluntary deductions. These deductions are authorized by employees and may include amounts for purchase of company stock, retirement investments, deposits in a savings account, loan payments, union dues, charitable contributions, health, dental, and life insurance premiums, and alimony. You must report FICA tax withholding: To the employee on each paycheck, including both the withholding amount for the current pay and total amount of FICA tax withheld for the year to date. To the IRS on Form 941- the Employer's Quarterly Wage and Tax Report. Jan 18, 2018 · Welcome to 2018 Payroll in Excel - What's happening to my Paycheck edition! The video shows a Semi-Monthly Payer paycheck and withholding formulas. A Weekly ...