How to Calculate Medicare Taxes

First, understand what percentage of FICA taxes are Social Security withholdings and which are Medicare withholdings. The Medicare portion of FICA is 1.45% of the total compensation for the tax. Keep in mind that no wage base limit exists. Consider a model where you pay one of your employees a salary of $100,000. Multiply $100,000 by 0.0145%. You, as the employer, and your employee must each pay $1,450 for the Medicare portion of FICA.

Employers’ responsibilities extend further than withholding FICA and depositing it to the Internal Revenue Service. Employers must file quarterly or annual tax returns to report FICA. Making the quarterly or annual return depends on a business’s size. Employers report Social Security and Medicare Withholding on their employees’ W-2 forms. Employers do not pay into FICA if they hire independent contractors or temporary workers. 

Our full accounting suite of tools can support small businesses once you learn how to calculate Medicare taxes. Use our W-2/1099 Forms Filer software to generate your required Form W-2s. Our AMS Payroll software supports federal payroll forms, like Form 941. Speak with us today to learn your options by calling (405) 340-0697.

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