Are Medicare and Social Security taxes calculated on total gross income instead of after pre-tax pension deductions?

Wait, so does that mean I should expect the same thing with my 401k contributions? I always thought all "pre-tax" deductions meant they came out before ANY taxes were calculated. Is there a list somewhere of which deductions reduce which taxes? This is confusing.

For 401(k) contributions, the same rule applies - they reduce your federal and state income taxes, but they don't reduce the amount subject to Social Security and Medicare taxation. That's why they're sometimes called "income tax-deferred" rather than completely "pre-tax." The main deductions that reduce FICA taxes (both Social Security and Medicare) are Section 125 cafeteria plan deductions, which typically include health insurance premiums, vision, dental, dependent care FSA, and health FSA contributions. Transportation benefits and HSA contributions through payroll also generally reduce FICA taxes.

This sounds interesting. How exactly does it work? Does it just tell you what's going on with your paycheck or does it actually explain the tax laws behind it? My tax situation is complicated with multiple jobs and I'm trying to understand if I'm being taxed correctly.

Sounds like an ad. Is this legitimately useful for complicated situations? I have clergy income which is weird for SE tax AND I have w2 income with pension contributions.

The tool basically scans your tax documents (W-2s, pay stubs, 1099s, etc.) and identifies potential issues or optimization opportunities. It not only tells you what's happening but explains why, citing relevant tax codes and regulations. For your multiple job situation, it would help confirm if the withholdings across jobs are appropriate. For clergy income and mixed W-2/pension situations, it's actually quite helpful. My brother has clergy income too, and the tool helped him understand his dual tax status for Social Security purposes. It explained which portions of his compensation were subject to self-employment tax versus regular FICA, and which benefits were excludable from both income and FICA taxation.

How does this even work? Do they just call the IRS for you? Couldn't I just do that myself? Their website is kinda vague about the actual service.

Yeah right. Nothing gets you through to the IRS faster. I've been trying for 2 months to talk to an actual human about my tax situation. If this actually works I'll eat my hat.

They basically have a system that navigates the IRS phone tree and waits on hold for you. When they reach a human agent, they call you and connect you directly to the agent. You don't have to sit through the hold time yourself. It's like having someone wait in line for you. Yes, you could call yourself, but you'd likely spend hours on hold. The last time I tried calling directly, I waited 2.5 hours before giving up. With Claimyr, I went about my day and got a call when an agent was on the line. They don't talk to the IRS for you - they just handle the hold time and connect you directly when an agent is available.

But isn't there a cap on Social Security wages each year? I think it's around $168,000 for 2025. So once you hit that cap, additional pension contributions wouldn't affect your future benefits anyway, right? I'm nowhere near that cap personally but just curious how it works.

Yes, you're correct about the Social Security wage base limit. For 2025, it's $168,600, and wages above that aren't subject to the 6.2% Social Security portion of FICA (though the 1.45% Medicare tax still applies to all wages with no cap). If your income is below the wage base limit, then having your pension contributions not reduce your Social Security wages means you're building a higher earnings record for benefit calculation purposes. But if you're already over the limit, then it makes no difference to your future benefits. It's worth calculating where you stand relative to that threshold.

This is so confusing. So what deductions are both pre-income tax AND pre-FICA? I'm trying to maximize my take-home pay with my benefits selections.

The main deductions that reduce both income tax AND FICA taxes are Section 125 cafeteria plan items: health insurance premiums, dental/vision insurance, health FSA, dependent care FSA, and HSA contributions made through payroll deduction. Some commuter benefits (parking, transit passes) also reduce both. Retirement contributions (401k, 403b, traditional pension contributions) typically only reduce income tax, not FICA. Same with most life insurance premiums over $50k coverage. If you want to maximize take-home pay, focus on maxing out your health FSA and dependent care FSA if you have qualifying expenses, since those reduce ALL taxes - income, Social Security, Medicare, and usually state taxes too.