F•R•I•E•N•D•S fans will recall when Rachel received her first hard-earned paycheck from Central Perk only to find that some guy named “FICA” had taken a decent chunk. Well, FICA is also getting a cut of your pay, likely near 8%, so we want you to know where your money is going…
First off, FICA stands for the Federal Insurance Contributions Act, which established the tax that you and your employer pay to fund the Social Security and Medicare systems that support us in old age. Your employer withholds 1.45% of all your wages for Medicare, 6.2% on your first $118,500 of wages for Social Security (in 2015) and then kicks in a matching amount for each on your behalf.
Knowing that you shouldn’t have the 6.2% withheld for Social Security on more than your first $118,500 of wages is important for those of you that have side gigs or switch jobs mid-year. If you withhold from both jobs, you could end up overpaying. While you can request a refund if you overpay, you can avoid this interest-free loan to the government just by making sure you let your multiple employers know what’s already been withheld.
Not a Subscriber? SUBSCRIBE HERE for our weekly email.
11 Most Read IRIS Articles of the Week!
Why Secure Passwords Matter and How to Create Them
10 Ways to Celebrate International Women’s Day
Becoming a Great Podcast Host with Celeste Headlee
New Guiding Principles for Opportunity Zone Investors
Leaders: Do You Challenge Your Status Quo?
9 Marketing Trends That Will Dominate This Year
How To Keep Envy From Destroying Your Workplace
6 Tips to Help Your Journey to Retirement
Who Do You Sell to First
Forward-Looking Investing2 days ago
Moat Investing: Powered by Morningstar
Market Strategist2 days ago
We Are Not Convinced the Market Storm Has Completely Passed
Development2 days ago
Advisors: How To Answer “What Do You Do?”
Markets2 days ago
Higher Mortgage Rates, Student Loans and Nike
Equities3 days ago
7 Stocks That Pay the Largest Dividends of All That Trade on Nasdaq – Or Do They?
Advisor3 days ago
The Wizards of Wall Street vs. The Selbees from Michigan
Markets4 days ago
The Chameleons Are on the Run
Compliance4 days ago
Regulators Focusing on How Firms Identify, Monitor and Test Custody Scenarios With Client Assets