What is FICA tax (Social Security and Medicare)?
FICA tax is the Social Security and Medicare payroll taxes employers must withhold from employees’ pay and report each pay period and at year-end. RunWise Pay can help you get matched to a payroll provider—free for your business.
Quick answer: What is FICA tax?
FICA tax is made up of two parts taken from an employee’s wages: Social Security and Medicare. Employers and employees both contribute, and the totals are reported and paid to the IRS on a regular schedule.
If you run payroll in the US, you generally must withhold the employee portions from each paycheck, calculate the employer portion, and ensure the amounts are reported correctly. Payroll providers usually handle the calculations, filings, and year-end forms as part of their service.
RunWise Pay is a FREE matching service that can connect you with payroll service providers who handle FICA tax processing. We’re not a payroll provider and we don’t file taxes or give tax advice.
How FICA works (simple, practical steps)
Most small businesses calculate FICA each time they run payroll.
- Withhold employee FICA from each paycheck (Social Security + Medicare).
- Add the employer FICA amount for the same wages.
- Deposit/pay the total to the IRS on the required schedule based on your payroll situation.
- Report it through payroll tax filings and make sure your year-end wage forms are correct.
The exact rates, any wage limits (for Social Security), and deposit timing can change over time. Also, rules can vary by state for payroll setup and reporting even though FICA is federal.
Employer vs. employee: what you’re responsible for
You generally don’t “pay FICA by yourself” out of nowhere—you handle both sides.
- Employee portion: withheld from the employee’s gross pay.
- Employer portion: paid by the business in addition to what the employee earns.
If your payroll is set up incorrectly, it can create real problems later—interest, penalties, or employee reporting issues. That’s why many owners outsource payroll or use a payroll service when they’re unsure how US payroll works.
If you want help getting set up, get matched with a payroll service provider. It’s free to request matches; you choose the provider and the price depends on team size and what’s included.
What FICA means for you as a small-business owner
FICA tax affects your payroll in everyday ways:
- Cash flow: each pay period, part of your payroll cost is allocated to employer FICA.
- Accuracy: correct withholding and correct employer totals matter.
- Timing: payroll tax deposit deadlines must be met.
- Year-end reporting: payroll services help produce W-2s and support 1099 workflows where applicable.
Because this is general information, confirm specifics with a qualified payroll provider or accountant, and also check current IRS and state guidance for your situation.
Typical costs to manage FICA with payroll software or a provider
Most payroll services charge based on how many people you pay and how often you run payroll.
- Many options start with a monthly base fee (often in the ballpark of about $30–$80/month), plus a per-employee fee (often roughly $4–$10 per employee per month).
- If you have more employees, run payroll frequently (for example, weekly), need extra help, or want added services (like HR support, time/payroll integration, or specific compliance help), the total can be higher.
Important: these ranges are not quotes, and the “real” number depends on your state, pay frequency, number of employees, and what’s included. Always review the full pricing and confirm what tax filing services are included before you sign anything.
Payroll red flags (including FICA handling) to avoid
If you’re comparing providers, watch for these common red flags:
- Vague pricing: unclear base fees, per-employee charges, or fees for tax filings.
- Hidden costs: charges for changes, off-cycle payroll, or year-end forms.
- No clear tax-filing process: unclear who calculates, deposits, and files what.
- Poor support: slow responses when you need help fixing an error.
- Pressure to sign fast: a provider that discourages you from reviewing details in writing.
Before you choose, confirm in writing what’s included: payroll runs, FICA/IRS deposit handling, year-end support (like W-2 preparation), and how corrections are handled if something is wrong.
RunWise Pay can help you compare options by connecting you to providers based on your business details. It’s free for you, and you remain in control.
FICA is the Social Security and Medicare payroll tax you must withhold and report for employees, and a payroll provider can handle the calculations and filings—RunWise Pay matches you for free.