So, I have recently been asked, “What is FICA?” Until a couple of years ago I would have to admit I thought it was a type of cactus or something.
The rates for 2015 are 6.2% for the Social Security portion (OASDI) on the first $118,500 wages paid. Beyond $118,500 there is no need to pay the social security tax rate. The max amount that an individual can pay into Social Security this year is $7,347.
The rates for 2015 are 1.45% for the Medicare portion (HI) on the first $200,000 wages paid. Beyond $200,000 there is an increase in rate to 2.35%.
The basic rule is that FICA is 7.65%, however, you can see with different income levels it actually can vary. It is federally regulated that employers withhold FICA taxes from their employee’s wages.
There are some exceptions and different situations that go along with this. Students that are enrolled at least half-time are exempt. (I believe that is 6 credit hours during the school year.) Also, if the student is enrolled in 3 credit hours during the summer they are exempt. If they are not enrolled in these amounts of credit hours during any of these times, are subject to FICA for income earned during that time.
There are a couple more exceptions regarding nonresident aliens and federal employees that have worked for the government before 12-31-83 continually to present are not subject to the OASDI, however, they are subject to the HI portion of FICA.
The situation of being self-employed is a bummer. You have to pay both sides. It is a bit more complicated than saying FICA is 15.3% for self-employed. If you want to talk about it, just let me know. I can always geek out about it for a bit.