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Social Security and Medicare Contributions

Tax Year:     Salary: $
Employee Self-Employed

 

How Contributions are Calculated

The FICA (for Federal Insurance Contributions Act) tax (also known as Payroll Tax or Self-Employment Tax, depending on your employment status) is your contribution to Social Security and Medicare as a percentage of your salary:

Tax Year:        
          source: Social Security Administration

If you're an employee, then you pay one half of this total (probably as a withholding on your paycheck); your employer pays the other half for you (and then gets a deduction for their half on their corporate tax return, since it's an expense - for them it's as if the FICA "half" is an additional piece of salary). If you're self-employed, then you pay the whole total yourself as Self-Employment tax, and then get a tax deduction on half of it as an "adjustment" on your tax return.

Now here's where it gets a little confusing. What the previous paragraph shows is that being self-employed is like being an employee, but at a lower salary - lower by the FICA "half" that employers pay for their employees. And so, if you're self-employed, you don't have to pay FICA on all your salary, just on 92.35% of it (92.35 being 100 minus 7.65 - which is the contribution that your employer would have paid, if you had an employer, which you don't).

 

Additional Medicare Tax

Starting in 2013, people with high salaries will pay a new additional Medicare tax of 0.9%. Unlike the rest of Medicare, this new tax depends on your filing status:

If your filing status is...
 
then the 0.9% tax applies
to salary above:
Single $200,000
Married filing jointly $250,000
Married filing separately $125,000

 

More Information

For much, much more on Social Security, see this official history site, which includes this table showing the contribution percentages since the program started in the 1930s.

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Tax Changes for 2013 and 2014

For 2011 and 2012 only, the employee's "half" didn't equal the employer's "half" for Social Security: they contributed 4.2% and 6.2% respectively. For 2013, both contribute 6.2%.

(Note: These calculators do not show the additional Medicare tax applied to high incomes starting in 2013. See below.)
 

 

 

 
Also See...

Retirement Calculator
Roth IRA Limits
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Credit Card Calculator
Investment Return
Tax Cuts
 

 

 
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Social Security Administration