What does FICA stand for?

FICA stands for the Federal Insurance Contribution Act, which is the correct answer. This act is essential in the context of U.S. taxation as it provides the framework for funding Social Security and Medicare programs, which benefit retirees, the disabled, and other eligible individuals.

Under FICA, employers and employees each contribute a specific percentage of an individual's earnings to these programs. This payroll tax is crucial for maintaining the financial stability of Social Security and Medicare, ensuring that funds are available to support these social insurance programs as they provide essential benefits to millions of Americans.

The other options do not accurately represent what FICA stands for. For instance, "Federal Insurance Contributions and Assessments" and "Federal Internal Revenue Contributions Act" misinterpret the acronym and the purpose of the legislation. The "Fund for International Contributions Act" is entirely unrelated to the FICA and does not address the payroll tax necessary for Social Security and Medicare. Understanding the precise terminology helps clarify the structure and function of this important U.S. federal tax.