Employment Taxes

Resources for Understanding Employment Taxes

Employment TaxesEmployers must deposit and report employment taxes. This includes reporting wages, tips and other compensation paid to each employee as well as furnishing copies of Form W-2 to each employee so that they can accurately report their earned wages. The IRS website offers employers resources to help better understand reporting requirements.

Federal Income Tax must be withheld from employees’ wages. In order for the employer to figure out how much tax to withhold, employees must complete a Form W-4 and indicate the appropriate method and applicable withholding.

Social Security and Medicare Taxes must also be paid by the employer and be withheld from employees’ wages. These taxes have different rates. For the current year social security wage base limit and social security and Medicare tax rates, refer to the IRS website and review the Employer’s Tax Guide.

Other taxes include:

Additional Medicare Tax – Employers are responsible for withholding the 0.9% Additional Medicare Tax on employee’s wages and compensation that exceeds $200,000 in a calendar year.

Federal Unemployment (FUTA) Tax – Employer’s report and pay FUTA tax separately from Federal Income tax, social security and Medicare taxes. Employees do not pay this tax or have it withheld from their pay.

Depositing Employment Taxes – Employers must deposit federal income tax withheld as well as the employer and employee social security and Medicare taxes and FUTA taxes. The requirements for depositing vary based on the business and the amount withheld.

Self Employment Tax – is a social security and Medicare tax pax for individuals who work for themselves.

These, and other related topics, are available at the IRS website. If you should have any questions, you may also contact one of our SDP Payroll Professionals.

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*Southland Data Processing, Inc. (“SDP”) is not a law firm. This article is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other SDP materials does not create an attorney-client relationship. SDP is not responsible for any inadvertent errors that may occur in the publishing process.


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