Question

FICA taxes ae comprised of: (all that apply)

A) federal unemployment insurance tax

B) federal income tax

C) Social Security taxes

D) Medicare taxes

Answer 1

FICA taxes include Social Security and Medicare taxes but do not encompass federal unemployment insurance tax or federal income tax. These contributions are a significant part of federal revenues.

Step-by-step explanation:

FICA taxes are comprised of certain specific federal payroll contributions. The acronym FICA stands for the Federal Insurance Contributions Act. Specifically, FICA taxes include Social Security taxes and Medicare taxes. These taxes are different from federal unemployment insurance tax and federal income tax. Social Security taxes equate to 6.2% of gross income, while Medicare taxes are set at 1.45% of gross income.

Together, these payroll taxes provide a significant portion of federal revenues, more than 80%, and are used to fund the respective Social Security and Medicare programs. FICA does not include federal income tax or federal unemployment insurance tax.