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What Is FICA?

The Federal Insurance Contribution Act (FICA) mandates that money needs to be collected from employers and employees and held in a special Social Security Trust Fund. It is necessary for every employee to pay a certain percentage of their wages (usually 12.5%) to go to this fund and that same amount of money is also required from the employer. This scheme has been in operation in the United States since 1935 when it was introduced by President Franklin D. Roosevelt as part of the Social Securities Act.

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