What is FICA?
Have you ever looked at your paycheck and thought, “Who is FICA and why is she taking my money?” If so, don’t worry, FICA isn’t someone stealing from you. In fact, FICA is an acronym that stands for the Federal Insurance Contributions Act tax, which is made up of two federal taxes. The first is Social Security, which is a federal program that provides benefits to retired people. The second tax is for Medicare, a federal health insurance program for people 65 and older. The current tax rate for Social Security is 6.2%, while the Medicare tax rate is 1.45%. Together, these taxes make up FICA. So, next time you notice these deductions from your paycheck, remember: they’re supposed to be there!
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