Actually, even the money you pay into FICA is also taxed for federal income tax purposes. You do NOT get to exclude FICA from your taxable income, so you are paying the Social Security and Medicare taxes, and then paying income tax on that same amount. Your company (which matches the FICA taxes) gets to deduct the FICA tax from its incom…
Actually, even the money you pay into FICA is also taxed for federal income tax purposes. You do NOT get to exclude FICA from your taxable income, so you are paying the Social Security and Medicare taxes, and then paying income tax on that same amount. Your company (which matches the FICA taxes) gets to deduct the FICA tax from its income as a business expense (just as it deducts your salary payments from its income as a business expense). You however pay your income tax on your total earning INCLUDING the amount deducted for FICA. What is even more "interesting" is that when you are paid Social Security payments when you retire, you pay income tax on those payments too. So in some ways, the money used to cover your social security paymennts is taxed twice, once when it is paid to you when you earn your salary and then again when you get paid in retirement.
Actually, even the money you pay into FICA is also taxed for federal income tax purposes. You do NOT get to exclude FICA from your taxable income, so you are paying the Social Security and Medicare taxes, and then paying income tax on that same amount. Your company (which matches the FICA taxes) gets to deduct the FICA tax from its income as a business expense (just as it deducts your salary payments from its income as a business expense). You however pay your income tax on your total earning INCLUDING the amount deducted for FICA. What is even more "interesting" is that when you are paid Social Security payments when you retire, you pay income tax on those payments too. So in some ways, the money used to cover your social security paymennts is taxed twice, once when it is paid to you when you earn your salary and then again when you get paid in retirement.
Yes.