The Social Security Act of 1935 mandated the withholding of certain taxes in addition to federal income tax. Two different taxes are part of the Social Security Act of 1935 legislation: Social Security tax and Medicare Tax. These taxes are collectively known as FICA (Federal Insurance Contribution Act) taxes and both the employer, and the employee contribute in equal part to this tax.
Understanding how to calculate Social Security tax and Medicare tax withholdings is essential for payroll accounting students to ensure accurate payroll processing and compliance with federal tax regulations. Mastery of these calculations helps you accurately withhold and remit taxes, avoiding penalties for underpayment and ensuring employees receive the correct net pay while upholding legal obligations. This lecture video includes detailed examples that will help you understand the topic. These detailed steps are important for you to understand, and you will need to be able to apply this knowledge in your homework and the unit exams.
Ask yourself: Are all of the steps clear? In what area do you need more practice?
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