Payroll taxes are the taxes that employers withhold from the employees’ paychecks and pay to the IRS. Depending on your business and the amount of payroll taxes you withhold, the depositing requirements vary. Employers file the withheld taxes from an employee’s pay using Form W-4.
Generally, employers are required to withhold the following taxes from their employee’s checks:
- Federal income tax
- Social Security
- Medicare Tax
- Additional Medicare Tax
- State income taxes, if any
- Local tax withholdings, if any
It should be noted that beginning 2013, the employee tax rate for Social Security rose to 6.2% and the Social Security wage base limit rose to $113,700. Employers should keep that in mind when withholding payroll taxes. Additional Medicare Taxes are only to be paid by those employees whose wages exceed $200,000.
To ensure that the correct amount of taxes have been withheld, employers and employees can use IRS Publication 15 Employer’s Tax Guide. The funds that are withheld should be provided to the IRS in a timely fashion.
There are certain other taxes that employers need to pay out of their own funds. Employers are required to pay the Federal Unemployment (FUTA) Tax, Social Security taxes, Medicare taxes, and State Unemployment Taxes (SUTA) from their own funds, and not from the employees’ pay. Employers must deposit payroll taxes with the IRS and also file reports with state and local agencies.
Those who are self-employed must pay the Self-Employment Tax (SE tax). This tax is similar to the Social Security and Medicare tax that employees pay through payroll taxes.