 Hello, in this lecture we will define Federal Insurance Contribution Act FICA. According to Fundamental Accounting Principles, Wild 22nd Edition, the definition of Federal Insurance Contribution Act FICA is, taxes assessed on both employers and employees, social security and Medicare programs. When we're talking about FICA, we're not talking about just the social security, we're talking about both social security and Medicare. These are generally thought of as payroll taxes, taxes that are going to be withheld from the employee pay, at least half of them, and the other half of them will be paid by the employer based on the employee's wages. So we're going to have half of the social security and Medicare that the employer is going to have to take out of the actual paycheck, out of the net pay with holding that money and then paying it to the government. Then they're also going to have to basically match that and put in the other half of it from the actual employer that's not coming out of the employee wages. The rate for these taxes are generally going to be more of a flat tax rate. So we're not talking about a progressive tax rate, it's going to be more of a flat tax rate. If we're looking at the W2, then we see that we're going to have the social security and Medicare as items that have been pulled out of net pay and have been reported on the W2 here. These are not withholdings that have to do with the federal income tax that is going to be the bottom line of the 1040, the payments on the 1040. These are added tax that are pulled out of the employee wages, only the employee portion of the social security and Medicare that have been pulled out of the net check reported in this way. If we look at the corporation's reporting forms, they have to report quarterly a form 941. This is 2016 941. We've got the information statement up top. We've got which quarter we are talking about. Then we're going to basically have the total wages for all employees that we're going to report here. And that will be similar to all the wages reported on all the W2s or the W3 if we were to add up all the wages. But it's going to be a bit different when we get down to the social security and Medicare because there's some bit differences. There could be a cap in terms of social security. So we'll have a little bit different in terms of total wages for that reason. But once we have that number, we're going to have more of a flat tax rate. So we're going to take that number multiple times a flat tax rate to give us the social security taxes, the Medicare taxes. And then we're also going to have to add up all the withholdings we made for federal income tax, not the federal income tax for the company made on the company's net income, but the federal income taxes that the company had to withhold on the employees wages. So we're going to report that as well. And then basically add all that up. And then the bottom of the form 941, we're going to compare that to what actually has been paid. And this is going to be similar reporting to like a 1040 where we already made all the payments and we're just reporting the liability at that point in time and comparing it to the payments that we have made, we've taken that out of our paycheck. And usually we get a refund in terms of the 1040. In terms of the 941, it's a similar process and that we've already made the payments, hopefully, we're supposed to have already made the payments. And now we're just comparing that to the actual liability. But the difference is that because it's a flat tax, we should be pretty much exactly right on. So if we did things correctly, we have the ability to be exactly right on the ability that we don't have with the progressive tax system for the 1040. So hopefully, this is just a reporting document saying, Hey, this is the liability. This is what we have then paid. And we don't owe anything more at this point in time. Off the payroll, you