Can an Employer Force an Employee to Reimburse FICA Taxes Paid By the Employer?
Full Question:
Answer:
FICA is the acronym for the Federal Insurance Contributions Act. This act mandates that an employer withhold a set percentage of an employee’s salary each pay period. FICA also requires that the employer match the employee’s amount and contribute the money to a government account known as the Social Security Trust Fund. This fund provides retirement income, as well as disability insurance, Medicare, and benefits for survivors. This is a legal obligation of the employer that must be funded by the employer.
Companies are responsible for paying their portion of payroll taxes. Social Security and Medicare taxes are paid both by the employees and the employer. Both parties pay half of these taxes. Employees pay half, and employers pay the other half. These payroll taxes are an added expense over and above the expense of an employee's gross pay. The employer-portion of payroll taxes include the following:
•Social Security taxes (6.2% up to the annual maximum)
•Medicare taxes (1.45% of wages)
•Federal unemployment taxes (FUTA)
•State unemployment taxes (SUTA)
Almost all employed and self-employed workers are covered by Social Security and are expected to pay FICA tax or self-employment taxes. The major exceptions are most civilian federal government employees hired before 1984 (they are covered by and pay the 1.45% tax for Medicare but not for Social Security retirement benefits) and about 25% of state and local government employees with a pension plan. There are also other limited exceptions that apply (e.g., some on-campus college student employment).
Because FICA is a federal tax, there has been no exemption created for employees in different states. However, there may be special circumstances for state taxes.
It would be recommended that you consult with your local tax professional for more information.
