Payroll Tax (FICA)
Taxes that fund Social Security and Medicare, typically withheld from wages.
Payroll taxes include Social Security and Medicare taxes. They are separate from federal income tax and apply to wages and self-employment income.
If you are self-employed, pair this with the self-employment tax guide and the S-Corp reasonable compensation guide to see how payroll taxes change across entity types. For high earners, the Medicare surtax glossary adds the additional 0.9% wage tax on top of regular Medicare.
How sharper.tax Helps
sharper.tax includes payroll taxes in your total tax burden calculation so you see the real cost of each dollar earned, not just the income tax piece. For self-employed filers, we factor the self-employment tax deduction into every strategy we model. Sophisticated tax planning used to require a high-end CPA — we make it available for free.
Sources
- IRS Publication 15 (Circular E): Employer’s Tax Guide
- IRS Topic No. 751: Social Security and Medicare withholding rates
The information above is educational and not tax advice.