FICA

The Federal Insurance Contributions Act (FICA) establishes a Social Security and Medicare Tax on employers and employees. The wage base upon which FICA taxes are computed is established each calendar year. The employee's portion of the tax is deducted from the paycheck and then matched by the employer's portion of the tax. Certain payments to individuals including retirement, certain types of disability payments, medical, hospital and death benefits are exempt from FICA taxes. FICA taxes (payments by both employee and employer) are paid weekly by the employer, and quarterly and annual reconciliation returns are filed Detailed payroll records must be kept for at least four years from the due date or the payment of the tax whichever is later.