Accounting Dictionary

FICA

FICA means Federal Insurance Contributions Act.

The Federal Government thought it was unfair that some states had a retirement plan for its citizens and some did not. As part of the New Deal the Federal Insurance Contributions Act was passed to make sure all workers had some retirement income. The idea was that the employers and the employees would equally share the cost of providing the government mandated pensions which soon came to called Social Security. Currently employers deduct 7.65% of every worker’s salary and send that money to the Social Security Administration to provide Social Security and Medicare for older Americans. Employers match the money taken from employee’s paychecks with an equal check from the business’s bank account. If an employee made $100, the employer will deduct $7.65 from his pay and add an additional $7.65 in business funds. A total of $15.30 would be sent to the government for that employee. The payments are reduced to 1.45% matched by 1.45% by the employer when a worker’s pay reaches a certain ceiling amount. The ceiling amount changes yearly.

Sign Up to Learn More!

Join our mailing list today to get notified of new discount offers, course updates, Roger CPA Review news, and more!

Scroll to Top
Get Your eBook Today!

Fill out this form to have our eBook sent directly to your email address.

Access Until You Pass

The Elite-Unlimited course provides UNLIMITED continuing access to your course materials until you pass the CPA Exam! How does it work? Upon activating your course, you will have an initial 36 months of access. You can then renew your subscription as many times as you need to pass your exams—for FREE. Simply click the “renew” option in your student account and you can continue studying your high-quality course materials without losing any of your data and course progress.

Renewal Instructions

  •   Please purchase a renewal using the "Renew" option from the My Account page
  •   To qualify for renewal pricing, course must be renewed before it expires
  •   All renewals are effective from the current expiration date and cannot be deferred
  •   Test information cannot be reset (deleted) with renewal unless eligibility criteria is met (see Help page)