26 U.S.C. § 3101 (FICA)
Authoritative Statutory Source
FICA Tax (Social Security & Medicare)
Federal Insurance Contributions Act tax funding Social Security and Medicare programs.
Detailed Definition & Statutory Context
FICA Tax (Social Security & Medicare) is governed by 26 U.S.C. § 3101 (FICA) standards across corporate payroll administration, statutory tax withholding, and general ledger labor accounting. Rigorous compliance with FICA Tax (Social Security & Medicare) prevents IRS Form 941 deposit penalties and FLSA wage-and-hour litigation.
Statutory Formula & Equation
Employee FICA = 6.2% Social Security (to cap) + 1.45% Medicare
General Ledger / Payroll Journal Entry Standard
Debit: Gross Payroll Expense / Employer Tax Expense
Credit: FICA Taxes Payable / Federal Income Tax Payable / Net Pay Cash
Credit: FICA Taxes Payable / Federal Income Tax Payable / Net Pay Cash
Common Operational Pitfalls
- Excluding non-discretionary bonuses from FLSA overtime regular-rate calculations.
- Failing to cap Social Security tax withholding once employee earnings exceed the $168,600 wage base.
- Misclassifying non-exempt hourly employees as exempt salaried workers.