Federal Insurance Contributions Act FICA: What It Is, Who Pays

federal insurance contributions act definition

836, §201(d)(2), substituted “Civil Service Retirement Act” for “Civil Service Retirement Act of 1930”, and inserted “(other than the retirement system of the Tennessee Valley Authority)” after “retirement system”. 88–272 substituted “is a plan described in section 403(a), or” for “meets the requirements of section 401(a)(3), (4), (5), and (6)” in subpar. (5)(B), and added subpar. (5)(C).

99–509, except as otherwise provided, effective with respect to payments due with respect to wages paid after Dec. 31, 1986, including wages paid after such date by a State (or political subdivision thereof) that modified its agreement pursuant to section 418(e)(2) of Title 42, see section 9002(d) of Pub. For purposes of this chapter and chapter 2, a crew leader shall, with respect to service performed in furnishing individuals to perform agricultural labor for another person and service performed as a member of the crew, be deemed not to be an employee of such other person. (B) there shall be allowed as a credit against the tax imposed by subsection (b) for the first calendar quarter which begins after the date on which the taxpayer files the return specified in section 41(h)(4)(A)(ii) an amount equal to so federal insurance contributions act definition much of the payroll tax credit portion determined under section 41(h)(2) as is not allowed as a credit under subparagraph (A). During any period in which there is in effect an agreement entered into pursuant to section 233 of the Social Security Act with any foreign country, wages received by or paid to an individual shall be exempt from the taxes imposed by this section to the extent that such wages are subject under such agreement exclusively to the laws applicable to the social security system of such foreign country. (i) The facts are the same as in Example 5, except that Employer Q chooses (in accordance with paragraph (g)(3) of this section) to adjust its FICA tax determination for all pre-effective-date open periods by treating this section as in effect for all amounts deferred for those periods.

Topic No. 751, Social Security and Medicare Withholding Rates

Amendment by section 12112(b) of Pub. 99–272 effective with respect to service performed after Dec. 31, 1983, see section 12112(c) of Pub. 99–272, set out as a note under section 409 of Title 42. Amendment by section 8016(a)(3)(A), (4)(A), (C) of Pub.

  • Services performed by an employee under the age of 18 in the delivery or distribution of newspapers or shopping news, not including delivery or distribution (as, for example, by a regional distributor) to any point for subsequent delivery or distribution, are excepted from employment.
  • Of course, if the corporations had been related throughout all of 1979, only $22,900 of X’s first quarter disbursement would have constituted wages subject to sections 3102 and 3111.
  • (viii) Compensation for current services.
  • At that time, the amount deferred in each past year becomes reasonably ascertainable, and Employer O is able to determine that during 2001 Employee C earned a legally binding right to a life annuity of $4,000 per year beginning on December 31, 2018 when Employee C is age 62.
  • In accordance with a reasonable, good faith interpretation of section 3121(v)(2), Employer R determines that, for 1993, there is an amount deferred that must be taken into account as wages for FICA tax purposes.
  • Thus, the benefits are not treated as resulting from the deferral of compensation for purposes of section 3121(v)(2).
  • 99–514, set out as a note under section 1 of this title.

At the end of the 7th month C leaves the employ of D and enters the employ of E. C receives remuneration of $1,560 a month from employer E in each of the remaining 5 months of 1968, or total remuneration of $7,800 from employer E. The entire $7,800 received by C from employer E constitutes wages and is subject to the taxes.

What happens to furloughed employees during a government shutdown?

(a)(13)(A)(iii). 98–21, §324(a)(3)(C), struck out cl. (iii) which related to the case of retirement after attaining an age specified in the plan referred to in subparagraph (B) or in a pension plan of the employer. 1988—Subsec.

93–233, §6(a)(1), increased rate of tax from 4.80 percent to 4.95 percent and substituted calendar year “1974” for “1978” as the initial year for application of such rate. 2010—Subsec. 111–148, §9015(a)(1), designated existing text as par.

Tax on Employers

92–603, §135(b)(2), increased rate of tax from 0.9 percent to 1.0 percent. 93–233, §6(a)(1), increased rate of tax from 5.85 percent to 5.95 percent. (i) The facts are the same as in Example 5, except that Employer Q does not withhold and deposit the FICA tax due on benefits actually or constructively paid before January 1, 2000. (B) No additional tax required. Pursuant to paragraph (g)(2) of this section, no additional FICA tax will be due for any period ending prior to January 1, 2000. (i) In 2010, Employee F performs services for which she earns a right to 10 percent of the proceeds from the sale of a motion picture.

Thus, when Employee E retires at the end of 1996 and benefit payments under the arrangement begin in 1997, Employer Q withholds and deposits FICA tax on the amounts paid to Employee E. Payments under the arrangement continue on or after January 1, 2000. Employer Q does not choose (under paragraph (g)(3) of this section) to adjust its FICA tax determination for a pre-effective-date open period by treating this section as in effect for all amounts deferred and benefits actually or constructively paid for any such period. The periods in 1994 and 1995 are not pre-effective-date open periods for Employer Q. (1) In general. Unless an employer applies an alternative method described in paragraph (f)(2) or (3) of this section, an amount deferred under a nonqualified deferred compensation plan for any employee is treated, for purposes of withholding and depositing FICA tax, as wages paid by the employer and received by the employee at the time it is taken into account in accordance with paragraph (e) of this section.

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