Internal Revenue Service United States Department of the Treasury
Module 1: Payroll Taxes and Federal Income Tax Withholding

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The Social Security tax is also called the FICA (Federal Insurance Contributions Act) tax.

Social Security tax provides the following benefits for employees and their dependents:

  • Retirement benefits
  • Benefits for the dependents of retired workers
  • Benefits for the disabled and their dependents

The Medicare tax is used to provide medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of both are eligible to receive Medicare benefits upon reaching age 65.

Federal income taxes finance:

  • National defense, veterans, and foreign affairs
  • Social programs
  • Physical, human, and community development
  • Law enforcement
  • Interest on the national debt


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