A federal law that imposes taxes on both employers and employees (26 U.S.C. §§ 3101-3128). Taxes paid under FICA include the Old-Age, Survivors, and Disability Insurance (OASDI) tax (which is used to fund Social Security benefits) and the Hospital Insurance tax (which is used to fund Medicare benefits).

The obligation to pay FICA taxes generally arises at the same time as the obligation to pay federal income taxes. However, for certain types of deferred compensation, including restricted stock units, the obligation to pay FICA taxes may arise on vesting, rather than payment.

For more information, see Practice Note, Payroll (FICA) Taxes.