How to Calculate FICA Taxes

FICA taxes are calculated separately from income taxes.

FICA stands for Federal Insurance Contributions Act, which is the act that imposed payroll taxes. The payroll taxes are composed of the Social Security tax and the Medicare tax. FICA taxes are split between you and your employer. If you are self-employed, you pay the entire amount yourself, and it is called self-employment tax rather than FICA. To calculate your FICA taxes, you need to know how much earned income you have for the year and the current FICA tax rates.

Step 1

Calculate your total earned income. Earned income includes income from wages, salaries, tips and self-employed business income. Do not include interest you receive, rental income, unemployment, Social Security or capital gains income.

Step 2

Check the FICA tax rates on the Social Security website. As of 2012, the rate is 6.2 percent for the Social Security portion and 1.45 percent for the Medicare portion.

Step 3

Determine whether your earned income exceeds the annual limit for the Social Security tax by contacting the Social Security Administration. For 2012, the Social Security tax applies only to the first $110,100 of earned income.

Step 4

Multiply the the annual limit for Social Security taxes or your earned income, whichever is less by 6.2 percent (.062) to determine how much will be withheld for Social Security taxes. For example, if you have $65,000 in earned income, you will have $4,030 withheld for Social Security.

Step 5

Multiply your earned income by 1.45 percent (.0145) to calculate the amount of money that will be withheld for Medicare taxes. Unlike the Social Security tax, there is no cap on the income subject to the Medicare portion of FICA taxes. For example, if you have $65,000 in earned income, you will have $942.50 withheld for Medicare.

Step 6

Add the two dollar amounts to determine your total FICA taxes. In the example we've been using, you would add $4,030 and $942.50, for a total of $4,972.50.

Tip

In 2013, an Additional Medicare Tax of .9 percent is effective for higher-income taxpayers.

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