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What is the Federal Insurance Contributions Act (FICA)

  1. OnPay
  2. Payroll Software
  3. Terms and Definitions
  4. Federal Insurance Contributions Act

FICA definition and meaning

FICA stands for the Federal Insurance Contributions Act, a US payroll tax that both employees and employers pay to fund Social Security and Medicare.

 

More about FICA

FICA taxes fund old-age, survivor, and disability insurance (OASDI) benefits, as well as Medicare hospital insurance (HI) for the elderly and disabled. The law states that both employers and employees must contribute toward FICA taxes, but it’s the responsibility of the employers to withhold FICA taxes from employee paychecks, and to pay those taxes on the employee’s behalf.

Using FICA in a sentence

“I paid both of my employees a bonus this year, but I forgot to gross-up their checks to account for FICA taxes.”

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