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Social Security Taxes for Employers and Employees

Social Security taxes are one half of the Federal Insurance Collections Act (FICA) taxes. Social Security taxes fund the federal Social Security system for retirement, survivors, and disability insurance. Medicare taxes, the other half of FICA, pay for the Medicare hospital insurance system.

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  • The Social Security tax rate is 6.2% for the employee.
  • Most wages are subject to Social Security. Some, e.g., 401(k) contributions, are not.
  • The Social Security wage base limit, which is the maximum amount of income that can be taxed for Social Security, is $137,700 for 2020.
  • Employees cannot claim withholding allowances for Social Security taxes.
  • Employers report their Social Security taxes quarterly on Form 941 or annually on Form 944. Employees report Medicare taxes annually on Form 1040.
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