Which type of pay is typically subject to FICA taxes?

The correct answer is that all employee earnings are typically subject to FICA taxes. FICA, which stands for the Federal Insurance Contributions Act, refers to the federal law that mandates a payroll tax to fund Social Security and Medicare. This tax is applied to a wide range of compensation types that employees receive, including wages, salaries, bonuses, overtime pay, and other forms of remuneration.

FICA taxes are deducted from gross wages, meaning that any earnings an employee receives during their employment contribute to this tax, supporting key social programs that provide benefits during retirement, disability, and health care for qualified individuals.

This broad applicability to all employee earnings is crucial for ensuring that everyone contributing to the workforce has access to these programs in the future. It underscores the importance of understanding payroll taxes as they relate to total compensation, rather than only specific types of income.