As an employer, understanding the obligations associated with running payroll can be a little daunting. In this post we will explain what taxes you are responsible for, the returns that need to be filed as well as the associated deadlines.
What are taxes am I responsible for? An employer’s federal payroll tax responsibilities include withholding income taxes from an employee’s compensation and paying their Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA). FICA is comprised of the following taxes:
- 6.2 percent Social Security tax;
- 1.45 percent Medicare tax (the “regular” Medicare tax); and
- Since 2013, a 0.9 percent Medicare surtax when the employee earns over $200,000.
You must withhold these amounts from an employee’s wages. The law also requires you to pay the employer’s portion of two of these taxes:
- 6.2 percent Social Security tax
- 1.45 percent Medicare tax (the “regular” Medicare tax).
What other things am I responsible for? The following checklist list provides a brief summary of your basic responsibilities. Because the individual circumstances for each employer can vary greatly, responsibilities for withholding, depositing, and reporting employment taxes can differ.
- Verify work eligibility of new employees
- Record employees’ names and SSNs from social security cards
- Ask employees for Form W-4