Employees Taxes

Employees Taxes



Employees taxes
Understanding Employee Taxes
Employee taxes can be one of​ the​ most difficult to​ understand areas of​ running a​ business and hiring employees. if​ you​ don’t understand all of​ the​ complexities involving employee payroll tax,​ it​ can also get you​ into a​ heap of​ trouble.
The first employee tax factor you​ should understand is​ what taxes you​ are responsible for as​ an employer. There are three employee taxes that you​ will be responsible for paying.
The first is​ Medicare and Social Security tax. This is​ often referred to​ as​ FICA and provides welfare benefits funding for senior citizens. as​ an employer you​ are responsible for paying half of​ the​ FICA taxes and withholdings for your employee while the​ remaining half is​ withheld from their paycheck.
You are also responsible for paying federal unemployment tax. This tax funds the​ state unemployment benefits and the​ administrative costs associated with those benefits. it​ is​ important for you​ to​ know that you​ must pay federal unemployment tax on​ the​ first $7000 earned by each person you​ employ during the​ calendar year.
In addition to​ federal unemployment tax,​ you​ must also pay state unemployment tax. These taxes are based on​ the​ location and size of​ your business as​ well as​ the​ number of​ employees you​ employ. Due to​ the​ fact that each state operates its own unemployment program,​ these rates do tend to​ vary; so it’s best if​ you​ check with your own state’s unemployment division for specific details.
In addition to​ the​ taxes you​ must pay as​ an employer,​ you​ are also responsible for withholding employee tax. Even though this is​ the​ employee’s contribution,​ it​ is​ your responsibility to​ handle the​ employee tax withholding. you​ will need to​ pay close attention to​ the​ employee tax form,​ or​ W4,​ completed by the​ employee in​ order to​ know exactly how much money you​ need to​ deduct from the​ employee’s paycheck. Usually the​ amount of​ money you​ must withhold will depend on​ the​ number of​ withholding allowances claimed by the​ employee,​ their marital status and any exemption from withholding taxes that the​ employee might claim.
It is​ very important that you​ stay on​ top of​ your employee’s tax forms because they have the​ right to​ change them by submitting a​ new W4. if​ an employee submits a​ new employee tax form,​ thereby changing the​ amount of​ their withholding and you​ fail to​ deduct the​ correct amount of​ money,​ you​ could be subject to​ penalties by the​ IRS.
You will need to​ deposit both the​ taxes that you​ are responsible for paying along with the​ employee tax withholdings in​ an authorized depository for Federal taxes. you​ can do this by either mailing or​ delivering your check or​ money order. These taxes will be due either semiweekly or​ monthly. Your employee tax withholding due dates will be determined by the​ size of​ your payroll,​ dictated by the​ schedule. Usually,​ however; if​ your payroll is​ less than $2,​500 every three months,​ you​ can file quarterly. if​ your employee taxes are larger,​ you’ll need to​ file more often.
In addition to​ the​ employee taxes named above,​ recently there has been much discussion in​ the​ media regarding a​ proposed employee health tax. if​ instituted this tax would impose a​ $3000 tax on​ employers for each employee who is​ not covered by health insurance. the​ intend of​ the​ proposed bill is​ to​ force employers to​ cover more employees by health insurance; however critics of​ the​ bill claim that the​ proposed employee health care tax will only lead to​ more unemployment.
Summary as​ most employers know,​ employee taxes can be a​ real headache. Unfortunately,​ the​ employee payroll tax problem is​ a​ headache that simply must be endured. With a​ little understanding and careful attention to​ detail; however the​ hassle of​ filing employee tax withholdings can be a​ little less of​ a​ bother.




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