1. 1st Topic: FICA and Medicare Payroll Deductions
Payroll Unit
1st Topic: FICA and Medicare Payroll Deductions

2. FICA and Medicare Payroll Tax
Stands for Federal Insurance Contribution Act
Provides benefits for retired workers and their dependents
Also provides benefits for disabled workers and their dependents
Medicare
Government service that provides healthcare for:
Senior Citizens
Disabled U.S. Citizens

3. FICA and Medicare Payroll Tax
Who has to pay FICA/Medicare taxes?
All employees must pay this tax except:
Any student that works for the school he/she attends
Student FICA Exemption
During the academic year, students who are enrolled for six or more credits and who are working on campus are exempt from FICA (Social Security and Medicare) deductions.
Foreign diplomats
Non-resident alien on a temporary visa

4. FICA and Medicare Payroll Tax
How are FICA and Medicare taxes calculated
FICA: 6.2% of income paid by employee. 6.2% of income paid by employer
What about self-employed workers?
FICA is capped in 2018 at $128,400 (last year was $127,200)
Medicare: 1.45% of taxable gross
There is no income cap on Medicare
In fact there is a 0.9% surcharge on those earning over $200,000

5. Potential Problems With Social Security
In 2016: Nearly 60 million retirees, disabled workers, spouses and children got monthly Social Security payments
By 2035, that number that is projected to grow to 90 million receiving benefits.
About 168 million workers currently pay Social Security taxes
In 1960, there were more than five workers for every person receiving Social Security. Today there are fewer than three. In 20 years, there will be about two workers for every person getting benefits.

6. FICA and Medicare Payroll Tax
The Very Good News (hopefully):
We will all eventually collect social security benefits
Current average monthly payment is $1360. ($16,320 per year)

7. How to figure FICA Contributions
First find “Gross Pay per Period”
Gross Pay: The amount of money you “theoretically” make before any taxes or other deductions are taken out.
Take Gross Pay per Period and find 6.2% of that number. This will be your FICA Social Security deduction
Take the same original Gross Pay per Period and find 1.45% of that number. This will be your FICA Medicare deduction.