As an employer, you will have employment tax obligations if you have employees. As an employer you are responsible to withhold and deposit the employees’ portions of taxes and for some taxes pay an employer portion.
It’s not easy to remember all of the taxes that need to be paid by the employer for payroll, and you may not know you failed to pay one until you get an agency notice, possibly with a penalty. The following are the most frequent employer-paid taxes that require deposits and the appropriate form to be filed.
Social Security and Medicare
Federal insurance contributions act, or FICA taxes, include old-age, survivors, and disability insurance taxes, or social security tax and the hospital insurance tax, or Medicare tax. The rates for these taxes differ. Employers and employees are required by the federal government to pay social security and Medicare taxes which are a percentage of an employees pay.
The only tax with a limit on wages is the social security tax. The wage base limit is the amount of wages that are taxable for that given year.
There is no employer match for the Additional Medicare Tax. The tax is only levied on Medicare wages in excess of a specified dollar amount that varies according to the taxpayer’s status as a filer. This tax is withheld by the employer.
Federal and State Unemployment
Under the Federal Unemployment Tax Act, FUTA, state unemployment systems make payments to workers unemployed through no fault of their own. Both a federal and state unemployment tax are paid by most employers. FUTA tax is only paid by the employer and is not withheld from employee wages.
State unemployment insurance taxes are a percentage of the “taxable wages” that the employer pays for each employee. Annual state SUTA rates are provided by each state. You can find your state’s unemployment tax rate here.
Local Taxes
Employers are also subject to compliance with lots of local payroll taxes. These taxes depend on where your employees will be working, and/or living. Some local taxes are only levied in relation to employers within a locality. Contact your local tax department to see if they collect any other taxes paid by the employer.
