Employment Taxes - What Are They?


Visitors: 528

If you have employees, you are responsible for paying a variety of taxes at the federal, state, and local levels. You must also withhold certain taxes from the paychecks of your employees. So, what are employment taxes?

Employment taxes include the following.

1. Federal income tax withholding

2. Social Security and Medicare taxes

3. Federal unemployment tax (FUTA).

Federal Income Taxes/Social Security and Medicare Taxes

You generally must withhold federal income tax from wages paid to an employee. Form W-4 is used to determine the specific amount, although most payroll services or your accountant will do this for you.

Social security and Medicare taxes pay for benefits that workers and families receive under the Federal Insurance Contributions Act (FICA). Social security tax pays for benefits for the retired, survivors, and disability insurance distribution provisions of FICA. Medicare tax pays for benefits under the medical care provisions of FICA. As an employer, you must withhold a percentage of these taxes from employee and match the withholding amount.

In general, you must deposit these taxes by check or cash to an authorized financial institution, typically your bank. Check with your tax professional to make sure you are not required to use the Electronic Federal Tax Deposit System (EFTPS). Regardless of the payment method, you will then report them on Form 941, the Employer’s Quarterly Federal Tax Return

Federal Unemployment Tax (FUTA)

FUTA is a combined federal and state program that provides unemployment compensation to the unemployed. As a business owner, you are solely responsible for paying this tax, to wit, nothing is withheld from the paychecks of your employees. FUTA is determined by using Form 940, but you are encouraged to use a tax professional to determine payment amounts.

Employment taxes can be frustrating for a small business owner. They are, unfortunately, a necessary evil as your business grows.

Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.


Article Source:

Rate this Article:  0.0/5(0 Ratings)

Related Articles:

Employment Taxes - Depositing With The IRS

by: Richard Chapo (August 28, 2005) 

Failure To Pay Employment Taxes - Penalties

by: Richard Chapo (August 28, 2005) 

Figuring Your Basis, Get It Right, Reduce Your Taxes, Get It Wrong and Pay Much .

by: Cassandra Ingraham (November 13, 2006) 

Expat Taxes - Paying Taxes When You Live Abroad

by: Sara Pinto (December 17, 2010) 
(Shopping and Product Reviews/Collectible Jewelry)

Careers and Employment - Baby Boomers Need Flexible Employment Opportunities to .

by: Anna D. Banks (July 11, 2008) 
(Business/Careers Employment)

Employment Law: Unfair Dismissal - Employer Succeeded in Changing Terms of ..

by: Rosanna Cooper (August 25, 2005) 
(Business/Careers Employment)

Employment Law: Time Limits for Bringing Employment Tribunal Claims

by: Rosanna Cooper (August 21, 2005) 

Commercial Law - Employment Law - Interpretation of Terms of Employment Contract

by: Rosanna Cooper (March 13, 2007) 

Employment Law FAQ - Top Questions for Employment Solicitors

by: Chris Norton (March 15, 2007) 

Home Business Taxes - How To Stop Taxes In Your Home Business From Sneaking Up ..

by: Aaron Parkinson (December 23, 2006) 
(Home Based Business)