Which of the following statements about FICA tax withholding is true?

The statement regarding FICA tax withholding that is true pertains to how employers must withhold these taxes based on employee classification. This is because FICA (Federal Insurance Contributions Act) taxes, which fund Social Security and Medicare, apply differently depending on whether a worker is classified as an employee or an independent contractor. Employers are required to withhold a certain percentage of wages for FICA taxes from their employees' paychecks. However, independent contractors operate differently; while they do not have FICA taxes withheld from their payments, they are responsible for reporting and paying these taxes themselves.

The role of employee classification is crucial, as it determines who is subject to withholding and who isn’t. Employees have taxes withheld automatically by their employer, while independent contractors must manage their FICA contributions independently. This distinction underscores the importance of proper classification on tax obligations. Understanding this concept is key for both employers and workers to ensure compliance with tax laws.