 In this presentation we will take a look at FICA for the employer specifically. We're concentrating here on FICA for the employer. Remember that there's two components of FICA. We've got the Social Security and the Medicare. We'll start with the Social Security focusing here on the employer portion. Note and remember that every time we talk about Social Security we want to further remember that there's different names and that will be used for Social Security and acronyms that will be used. If someone says FICA in general they may be referring to the Social Security component of FICA even though there are two components Social Security and Medicare and then often when we talk in words we typically call it Social Security being the Social Security component that the easiest to basically say. It can also be called the Social Security or the other way it could be said is the old age survivors and disability insurance and that is a long phrase of course so it's not often said in when we're talking about it. However that would be a formal term that can be used for it and when we abbreviate it then we typically may use the acronym of OASDI. So all of that is relevant as we do the calculations because every time we see something that is worded a little bit differently they don't look all the same. You have to know what we're talking about. Now we've talked about this between the employer and the employee in prior presentations. We're just concentrated on the employer portion at this time. Remember that there is an employee and employer portion of it and when we think about the employer portion we're thinking about the amount that's going to be recorded as payroll taxes. So remember that anything that's in the employee side is really not payroll taxes on the income statement for us because it's not a tax that is being paid by the company. It's a tax to the employee to the employer or anything that's on the employee side is really just part of compensation to the to the employee. It just so happens that we're paying their compensation to people that they should owe money to. The real payroll tax calculation is here when we're talking about the employer type taxes which includes social security but only the 6.2 half that the employer pays. So when we do the journal entry for payroll taxes it really only includes the 6.2 percent that would be a debit to payroll tax expense for social security not the 6.2 percent that would be coming out of the paycheck that would just be part of the payroll expense. The payroll expense not payroll taxes expense. So the payroll tax expense is really the employer portion and we'll see that as we as we do the calculations for social securities. Then we have the cap of course is that 127,200 same thing as with the employee portion we will stop paying the social security at the point in time of that cap. And again the rationale for that is really that as we pay more money into social security it increases the benefits we will get at retirement age from social security up until a certain point. So people that earn more money are obviously paying 6.2 percent of a higher wage and into social security and as they pay more into it they're actually getting less benefits out from it and at some point in time putting more money into social security doesn't increase the benefits you'll receive at retirement at all and that's part of the rationale for having the cap. So note that the cap will change from year to year and if percentages change as long as we know what the rule is we can look up the cap and we can look up the percentages. So and then we have the Medicare and just like social security we looked at it from the employee and employer portion but we're focusing here on the employer side of it. Medicare 2 will only have the rate the 1.45 percent that the employer pays as employer payroll taxes. The other side of the 1.45 paid by the employee is going to be part of the employee's wages. So we record that as wages expense it's their taxes that we just happen to be logistically taking care of paying on their behalf whereas the 4.5 percent that we pay above that is payroll taxes it's going to go into a payroll tax expense income statement account rather than wages expense and then it has no cap and it could have an additional amount of 9 percent if earnings for a higher income individual of 200,000 over 200,000 accounting I don't know anyone in accounting