Who is FICA?? The tax man cometh!! Social Security, Medicare, Income Tax

Vocabulary – Social Security Social Security – (FICA – Federal Insurance Contributions Act) – provides income for people when they retire; start collecting social security when you turn 62, BUT you don’t get full benefits. Your full retirement is based on when you where born. Retirement age born after 1960 is 67!! Social security amounts to 6.2% of your GROSS income.

Will the money be there when I retire?

Vocabulary - Medicare Medicare – (FICA) – nation’s largest health insurance program for people 65 and older Medicare amounts to 1.45% of your gross income Apply for Medicare benefits within three months of your 65th birthday. ** The cost of SS and Medicare are split evenly between you and your employer.

What is Medicare?

TAXES!!!!! Income Tax – depends on your income; based on deductions/write offs(adjusted gross income)

Example 1 Dan’s annual salary is $73,210. How much did Dan pay for Social Security and Medicare? a. For the year? 6.2% +1.45% = 7.65% 73,210 x .0765 = $5,600.57 b. Per month? 5,600.57 / 12 =$466.71

Example 2 You have a full time job that pays $27.50 per hour for a regular 40 hour work week. You make 1.5 times your pay for overtime. a. What is your gross annual income? 27.50 x 40 x 52 = 57,200 b. Suppose you worked 60 hours of overtime for the year, what is your gross annual income? 57,200 + 60(1.5x27.50) = 59,675 c. What is your gross monthly income? 59,675 / 12 = 4,972.92 d. What amount of your gross monthly income do you pay for Social Security (6.2%) and Medicare (1.45%)? 4,972.92 x .0765 = 380.43 e. If you are in a 15% tax bracket based on deductions and you pay 6% state income tax, how much of your monthly income do you pay in taxes? 4,972.92 x 0.21 = 1,044.32 f. What is your net monthly income (take home pay)? 4,972.92 – 380.43 – 1,o44.32 = 3,548.17