Payroll Taxes- Information to know

Payroll Taxes- Information to know

Payroll taxes are mandatory deductions from employees’ wages to fund social insurance programs. Here’s a comprehensive overview of payroll taxes, including schedules and key information:

Types of Payroll Taxes

1. Federal Income Tax
   • Withholding: Based on the employee’s W-4 form and the IRS tax tables.
   • Schedule: Withheld each pay period and remitted to the IRS periodically (usually monthly or semi-weekly).
2. Social Security Tax (FICA)
   • Rate: 6.2% from both employee and employer, up to the annual wage base limit.
   • Schedule: Withheld each pay period and remitted along with Medicare taxes.
3. Medicare Tax (FICA)
   • Rate: 1.45% from both employee and employer. Additional 0.9% on wages over $200,000 (single filers).
   • Schedule: Withheld each pay period and remitted along with Social Security taxes.
4. State Income Tax
   • Withholding: Based on state-specific forms and tax tables.
   • Schedule: Varies by state but typically withheld each pay period and remitted periodically.
5. Local Income Tax
   • Withholding: Required in some municipalities and counties.
   • Schedule: Varies by locality.
6. Unemployment Taxes
   • Federal Unemployment Tax Act (FUTA): Paid by the employer at 6.0% on the first $7,000 of each employee’s wages. Employers typically receive a credit of up to 5.4% for state unemployment taxes, reducing the effective FUTA rate to 0.6%.
   • State Unemployment Tax Act (SUTA): Rates and wage bases vary by state.

Payroll Tax Filing Schedules

1. Federal Income Tax and FICA Taxes
   • Monthly Depositor: If total tax liability for the lookback period is $50,000 or less.
   • Semi-weekly Depositor: If total tax liability for the lookback period is more than $50,000.
   • Form 941: Quarterly report (due April 30, July 31, October 31, and January 31).
   • Form 944: Annual report (for small employers).
2. Federal Unemployment Tax (FUTA)
   • Quarterly Deposits: Due if the accumulated tax exceeds $500 (April 30, July 31, October 31, January 31).
   • Form 940: Annual report (due January 31).
3. State and Local Taxes
   • Schedules and forms vary: Check with the respective state and local tax agencies for specific requirements.

Key Dates

• January 31: Forms W-2 to employees, Form 940, and Form 941 (4th quarter) due.
• April 30, July 31, October 31: Quarterly Forms 941 due.
• Monthly and semi-weekly deposits: Based on the deposit schedule assigned by the IRS.

Additional Information

• Wage Base Limits: Social Security taxes have an annual wage base limit that can change each year. For 2024, it is $167,700.
• Exemptions: Certain employee categories (e.g., religious organizations, students) may be exempt from some payroll taxes.
• Penalties: Failure to deposit or report payroll taxes accurately and on time can result in significant penalties and interest charges.

For specific forms and detailed information, employers should refer to IRS Publication 15 (Circular E) and state-specific employer guides. If you need more detailed guidance or have specific questions, please let me know!