How does FICA tax factor into my final federal or state tax calculations?

So FICA is federal but not included in "federal income tax" calculations? That's confusing. If I'm trying to figure out my total tax burden for budgeting, should I also be including state taxes separately? And does state tax get calculated on top of federal + FICA, or just on top of my gross income?

Yes, FICA is federal but separate from what's typically called "federal income tax." They're collected for different purposes - income tax funds general government operations while FICA specifically funds Social Security and Medicare programs. State taxes are entirely separate and calculated on your gross income, not on top of federal taxes. Each state has its own tax rates and rules. For proper budgeting, you should calculate federal income tax, FICA taxes, and state/local taxes separately and then add them together to get your total tax burden.

Does taxr.ai handle state tax calculations too? I'm in California and the state taxes here are no joke. Would be nice to have everything in one place.

How secure is this? I'm always nervous about uploading my tax docs to random websites. Do they store your tax info or is it just a one-time analysis?

Yes, it does handle state tax calculations! I'm in New York which also has significant state taxes, and it broke down both my state and federal obligations. It was really helpful to see everything laid out together. Regarding security, they use bank-level encryption and don't store your documents after analysis. They explain on their site that they process your docs, generate the report, and then delete the originals. I was skeptical at first too, but their privacy policy convinced me it was safe to use.

Wait, how does this even work? The IRS phone system is notoriously impossible to navigate. Are you saying this service somehow gets you past the hold queue?

Sounds like BS honestly. I've been told by my accountant that the IRS basically doesn't answer phones anymore since covid. They're like 3 years behind on processing paperwork. How could this possibly work when the IRS itself is so understaffed?

It's actually pretty simple - they use a combination of technology that navigates the IRS phone tree for you and keeps dialing back when the system hangs up. When they get through, they connect the call to your phone. It's like having someone persistently call for you until they get through. I was skeptical too, but the reality is the IRS does eventually answer calls - it's just that most people give up before getting through. The service just handles the frustrating part of constantly redialing and waiting on hold. I spoke with an actual IRS agent who verified my FICA tax questions and explained how the wage base limit works when you have multiple employers.

Do you know if tax software automatically catches this? I use TurboTax and work two part-time jobs that together put me over the SS limit, but I've never noticed any adjustment for this.

Most tax software should ask you about multiple W-2s and calculate this automatically. However, it's worth double-checking by adding up the Social Security withholding from all your W-2s. If the total exceeds $10,453.20 (which is 6.2% of $168,600 for 2025), then you should be getting a credit for the excess. TurboTax should handle this, but sometimes you need to make sure you've entered all your W-2 information correctly. If you don't see the adjustment, I'd recommend using the "where's my refund" tool in the software to search for "excess Social Security" and see if it explains how it's being handled.

Yes, self-employed individuals pay what's called Self-Employment Tax, which is essentially both the employee AND employer portions of FICA. Regular employees pay 6.2% for Social Security and 1.45% for Medicare, while their employers match these amounts. As self-employed, you pay both halves, so that's 12.4% for Social Security (up to the wage base limit of $168,600 for 2025) and 2.9% for Medicare on all earnings. However, you do get to deduct the employer portion (half of your self-employment tax) when calculating your adjusted gross income, which helps offset the higher rate a bit.

Thanks for breaking this down! The quarterly payment approach sounds smart. I'm curious - when you calculate those quarterly payments, do you base it on your previous year's tax liability or try to project the current year? I've heard conflicting advice about whether to use the "safe harbor" rule (paying 100% of last year's taxes) versus trying to estimate what you'll actually owe this year. Also, you mentioned self-employment income on top of W-2 wages - does that mean if I have some freelance work on the side, I'd pay both regular FICA on my W-2 AND self-employment tax on the freelance income? That seems like it could get expensive fast!

For quarterly payments, I typically use the safe harbor rule (110% of last year's tax since I'm over $150k AGI) to avoid penalties, then true up at year-end. It's much simpler than trying to project current year income, especially if you have variable income streams. And yes, you'd pay both! Your W-2 wages get hit with regular employee FICA (7.65%), while your freelance income gets the full self-employment tax (15.3%). However, there's a small benefit - once your combined W-2 and self-employment income hits the Social Security wage base ($168,600), you stop paying the Social Security portion of SE tax on additional freelance income. You'd still pay the Medicare portions though. The double-taxation aspect is definitely something to factor into your freelance rates. I always tell people to add at least 20-25% to their desired hourly rate to cover the extra SE taxes plus the fact that you're not getting employer benefits.

Great point about RSUs and stock options! I'm just starting to get into higher compensation packages and hadn't even thought about equity compensation affecting FICA calculations. That's definitely something I need to factor in for my planning. Quick question - when RSUs vest, does the company automatically withhold the FICA taxes on the vested amount, or do you need to handle that separately? I'm worried about getting hit with a surprise tax bill if I'm not prepared for it. Also, thanks everyone for all the detailed explanations in this thread. As someone new to dealing with higher income tax complexity, this has been way more helpful than any of the generic tax advice articles I've been reading online!