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LSDefine
Simple English definitions for legal terms
FICA
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A quick definition of FICA:
Term: FICA
Definition: FICA stands for Federal Insurance Contributions Act. It is a law that requires employers and employees to contribute a portion of their earnings to fund two important programs: Social Security and Medicare. Social Security provides retirement, disability, and survivor benefits to eligible individuals and their families. Medicare provides health insurance to people who are 65 or older, as well as to some younger people with disabilities. FICA helps ensure that these programs have enough money to continue providing benefits to those who need them.
A more thorough explanation:
FICA
FICA stands for Federal Insurance Contributions Act. It is a law that requires employers and employees to contribute a portion of their earnings to fund Social Security and Medicare programs.
For example, if you earn $50,000 per year, your employer will deduct a certain percentage from your paycheck to contribute to Social Security and Medicare. You will also contribute a percentage of your earnings to these programs.
Another example is if you are self-employed, you are responsible for paying both the employer and employee portions of FICA taxes.
FICA is a way to fund important social programs that provide benefits to millions of Americans, such as retirement income and healthcare. The examples illustrate how FICA works in practice, showing how both employees and employers contribute to these programs. It is important to understand FICA and how it affects your earnings and benefits.