Quickbooks Payroll Services Insight – Types of Employment Taxes in the USA

Quickbooks Payroll Services Insight – Types of Employment Taxes in the USA

According to the Quickbooks Payroll Services, the list covers all major taxes including Income Tax, Unemployment Tax, FICA Tax, and Workers Compensation

Quickbooks Payroll Services recognizes different types of employment taxes that being an employer you must know and understand first-hand before you set up your payroll system and start hiring employees for your company. While the taxes like the Federal and state withholding allow you to just withhold the same from employee salary and pay it to the taxing authority, some other types of employment taxes including the FICA taxes (for Medicare and Social Security), are deducted from employee salary and must include the equal amount as a part of tax from you, the employer as well.  Besides, there are some taxes which run on totally different concept, where none of the employee contributes to them, and are considered as an inevitable responsibilities for an employer. The workers compensation and unemployment taxes are few of them.

We are furnishing here the list of employment taxes declared by IRS. The list covers the state employment taxes as well:

Trust Fund Taxes

There is one more tax that fall into the Employment Taxes category, i.e. Trust Fund Taxes, where tax amount is withheld from employees and are kept by you but must be paid to the taxing authority when due.

Federal Income Tax Withholding

It is the prime responsibility of employers to withhold the Federal Income Tax from employees. The tax is determined by the W-4 form the employee fills during the hiring process or at the time employee changes her status or wants to change the withholding amount. However, employers hold the rights to not to pay employees without a W-4 form on file.

State Income Tax Withholding

Each states follow the state income taxes which require employers to withhold the same from employees.  Some states use the federal W-4 form, while other states have their own forms. Check and comply in the manner your state requires income taxes to be withheld, reported, and paid.

Social Security and Medicare (FICA Taxes)

All US employers are mandatorily required to deduct FICA (Social Security and Medicare) tax amounts from the salary of all employees working in their organization and contribute the equal amount by his side and pay the consolidated amount as tax to the authority.

Federal and State Unemployment Taxes

All US employers are required to pay federal unemployment taxes, which are used to offer welfare and other benefits to the employees who have lost their jobs. No contribution is made by the employees to this tax. Besides, the employer contribution depends upon their gross payroll.  Besides, federal unemployment taxes, most states makes it mandatory for the employers to pay unemployment taxes and also to participate in the state unemployment tax plan.

Workers Compensation Benefit Funds

Employers are mandatorily required to pay into state-run funds. These funds offer benefits to employees who incur injuries or illnesses because of their work. The state worker’s compensation laws govern these benefits and are paid through the employer contributions to the state worker’s compensation funds.

Self-Employment Taxes

According to the IRS, the self-employment taxes fall in the category of employment taxes as they are like FICA taxes and involve Medicare and Social Security taxes for the self-employed.

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