What is the difference between FICA & Federal Withholding Tax?
FICA or (Federal Insurance Contributions Act) tax is a payroll (or employement) tax imposed by the US federal government to fund Social Security and Medicare. This tax is 7.65% of wages up to $97,500 for 2007 (and 1.45% of any wages over $97,500). You will not get a refund of any FICA taxes however payment into FICA gives you credits to receive social security when you qualify through retirement, disability or death. Federal Withholding Tax is the tax that employers are required to withhold that is a prepayment of each employee’s income tax. According to Wikipedia: The amount of a person’s federal income tax withholding depends on several factors such as: The taxpayer’s marital status. The number of children or dependents the taxpayer has. Whether or not he is an employee IRC 3401. If the taxpayer wants to claim child tax credits. If the taxpayer holds two or more jobs. If the taxpayer plans to itemize. Any tax exemptions from withholding that the taxpayer wants to claim. Any additiona
