If you are among the individuals earning a wage or a salary, FICA tax is a familiar issue. FICA stands for Federal Insurance Contributions Act. The Federal Income Tax differs from FICA; Federal Insurance Contributions Act taxes fund Medicare Programs and Social Security. This tax, also known as payroll tax, is deductible from your salary or wage automatically. Your company will send this deduction to the government. In this article, we’ll discuss all the issues around the FICA, including the basics of it, tax rates, and many more.
Your company withholds a part of your check every time you receive your wage or salary. This money is called payroll taxes and belongs to the government. There are different kinds of payroll taxes, and FICA is one of them. Medicare and Social Security taxes fall under the class of FICA taxes. Most employees and employers must pay FICA, and this tax is mandatory for them. Individuals who have a business must also pay Social Security and Medicare taxes. SECA taxes are for self-employed workers. This tax is based on the rules and regulations in the Self-Employed Contributions Act. The IRS webpage is an excellent source for more information about the topic.
FICA tax rates have increased since the first time they were introduced. Over the past few decades, there was no increase in rates. This tax is usually split between employees and employers. Calculating the FICA tax burden is easy, and you must multiply your gross payment by 7.65%. So, this simple formula makes you aware of the tax burden.
Paying the total FICA tax for self-employed workers is difficult. The Social Security tax is 12.4%, and the Medicare Tax is 2.9% for these individuals. These workers can pay every quarter, which is a significant advantage. If you want to find out the amount you owe, the instructions provided by the IRS can be helpful. Self-employed individuals must deduct half of the tax (7.65%) when filing their tax returns. It is an above-the-line deduction that can reduce your income tax. You can visit the IRS website for further information regarding this.
The wage base limit applies to you if you pay Social Security taxes. There’s an exemption for gross income above a specific level. The wage limits change annually and are based on inflation. This limit for 2022 is $147000. When you figure out the size of Social Security benefits, this is the maximum amount considered money.
The wage limit is not for Medicare taxes. Individuals with good incomes must pay an additional Medicare tax. This rule was introduced in 2013. This additional rate is 0.90% and is applicable for wages, salaries, and tips. The income ceiling in 2022 is $200000 for single filers, eligible widows, and individuals with the head of the household status. The ceiling for married couples who file the joint return is $250000, and $125000 is the ceiling for couples who file separate tax returns. Form 8959 will help you calculate the amount you owe. You can download this form from the IRS’s official website. The IRS website is an excellent source of all the important tax information. Don’t forget to check that regularly to stay up to date with the latest news. Every required piece of information is available there, and it is the first source of the announcement.
Are you seeking Bronx Tax Services? Do you suffer from tax problems or IRS trouble? SCL tax services in & near Bronx, NY, is the answer. We provide different tax services like business taxes, payroll services, tax accounting, and bookkeeping services. Our tax professionals and Bronx accountants are always ready to help you through the entire tax preparation process. The best tax accountants in the industry are working with us; we can offer top-notch services. Call our tax office at +1-347-305-4348 to benefit from our hard work and performance!
FICA taxes are mandatory for resident and nonresident aliens. Whether you work part-time or full-time, FICA is obligatory. However, some exceptions are available for this type of tax. The following examples are some of them.
For instance, college students who have an on-campus job are exempt from paying this tax. Some nonresident aliens, like government employees and teachers, can also receive these exemptions. Some religious groups are also eligible to get exemptions. These groups must file the IRS Form 4029 to be qualified for the benefits. Medicare and Social Security benefits will be withheld if you fail to pay payroll taxes. So, you need to pay close attention to this type of tax to avoid penalties and consequences in the future.
Some individuals might pay more Social Security taxes than they have to pay. These things can occur in the case of a job switch when all your earnings are taxed. Luckily, you can get a refund in this case. If you have several jobs, you can request the overpayment for Social Security on Form 1040. The IRS will use a portion of your refund to pay the taxes that you owe, and the rest will be receivable. If you overpay and have only one job, ask your employer for a refund. Excess Medicare tax repayments are not refundable due to the lack of a wage base limit. When you have numerous jobs, you might underpay the FICA taxes that you owe. Separate estimated tax payments are required if this occurs.
Are you considering Bronx Tax Services? SCL tax services in & near Bronx, NY, is the solution. We offer quality services due to our experience and knowledge. Our tax professionals are experienced enough to guide you through tax preparation. Tax regulations are complicated, and they are constantly changing. Ordinary people can’t usually keep up with the changes and the new trends. So, you need help from tax experts and financial advisors. Our company has the best experts in the industry. Your satisfaction is our goal, and we do our best to achieve that. Our tax experts are friendly, and they love talking to you. Call us at +1-347-305-4348 right now to receive the services you deserve!
We are here to relieve you of the tax pressure by offering a wide range of Tax Services In & Near Bronx, NY. If you need expert advice or need us to complete your taxes, we will provide it for you. We know you work hard, so we work hard to serve your needs.
Your time is valuable, which is why we are here for you.