FICA: What Is the Federal Insurance Contributions Act

FICA stands for Federal Insurance Contributions Act, and it's part of the US federal payroll tax.

FICA associates with Social Security programs. Your number helps Social Security record your wages or self-employment. Working & paying FICA taxes helps you earn credits for Social Security benefits.

You are not the only one paying for Medicare or Social Security. The employer matches the average to 15.3% in every wage you obtain.

FICA doesn't only benefit people under Social Security and Medicare programs, which provide benefits for retirees, the disabled, and children. They benefit you.

If you are 30 or 40 years old, your FICA contributions will help your retirement in the future. The money you pay in taxes is not held in a personal account for you to use when you get benefits.

According to the Self-Employment Contributions Act passed in 1954, self-employed contribute to Social Security and Medicare with taxes on net earnings.