What are FICA taxes and why do some employees not pay this type of tax?
FICA is a kind of payroll tax deducted from your pay check. The Federal Insurance Contributions Act (FICA) provides for a federal system of old-age, survivors, disability and hospital insurance. The old-age, survivors, and disability insurance part is financed by the social security tax. The hospital insurance part is financed by the medicare tax. Each of these taxes is reported separately. The two components are: FICA tax which is 6.2% of all applicable wages and Old age disability Insurance which is 1.45% of all applicable wages. Exceptions to this deduction include students working for a university whose main goal in to obtain an education.
