• October 1, 2016
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Payroll taxes are federal and state taxes that every employer is required by law to withhold and/or pay on behalf of their employees. Employers are required to withhold state and federal income taxes as well as social security and Medicare taxes from every employee’s’ wages. In addition, employers are required to pay a matching amount of social security and Medicare Taxes for employees as well as paying federal and state unemployment taxes.

Percentage Costs for Social Security and Medicare

Federal income tax is withheld by the employer and calculated using the employee’s Form W-4 and withholding tables provided by the IRS.  The social security payroll taxes for employers are paid by both the employee and the employer.  For 2016, the social security tax rate is 6.2%.  Therefore, 6.2% is deducted from the employee’s wages and matched with 6.2% paid by the employer for a total of 12.4% in social security taxes. The wage limit for social security taxes is $118,500 per employee.  Medicare taxes are also paid by the employee and employer.  The Medicare tax rate for 2016 is 1.45% each.  Thus, a total of 2.9% is paid for Medicare taxes.  Based on these laws, an employer pays 7.65% in social security and Medicare payroll taxes costs.

Unemployment Taxes Costs

State unemployment tax rates are determined by individual state governments based on a wage base for each state.  Although the state unemployment tax is based on an employee’s salaries and wages, the entire state unemployment tax is paid by the employer. No monies are withheld from an employee’s salary or wages for the state unemployment tax.

For 2016, the federal unemployment tax rate (FUTA) is 6.0%. This applies to the first $7,000 the employer pays to each employee as wages during the year. The $7,000 is the federal wage base. Your state wage base may be different.  Generally, you can take a credit against your FUTA tax for amounts you paid into state unemployment funds. The federal unemployment tax is a payroll tax for employers that is paid entirely by the employer.

Must Read: 5 Must-Know Facts about Unemployment Benefits

Workers’ Compensation

Worker’s Compensation Insurance is a significant payroll tax cost for an employer.  The rates for Workers’ Compensation Insurance are determined by at least three variables:

  1. The type of business or industry,
  2. The type of job being performed, and
  3. The employer’s history of claims.

Workers’ Compensation is administered at the state government level and employers should check with his or her individual state regarding the rate for this payroll cost.

Benefits of Payroll Taxes

Some of the payroll taxes benefits paid by an employer are as follows:

  • Employer portion of insurance – health, dental, vision, life, disability
  • Employer paid holidays, vacations, and sick days
  • Employer contributions toward 401(k), savings plans, & profit-sharing plans
  • Employer contributions to pension plans
  • Post-retirement health insurance

An employer determines the type of payroll tax benefits that are offered.  For example, Company A may pay employees two weeks of paid vacation after five years of service while Company B pays two weeks of paid vacation after ten years of service.

Help for Unpaid Payroll Taxes

The laws for payroll taxes for employers can be extremely confusing for the average citizen.  When a business has unpaid payroll employment taxes, the IRS will seek to satisfy those debts from the business assets. If the business cannot pay the taxes, the IRS will attempt to find someone whom the assessment of the Trust Fund Recovery Penalty can be made. If you find yourself in a bind understanding the laws or if you fall behind in payment of your payroll taxes and the IRS is calling, the Law Offices of Nick Nemeth are here for you.  They possess the knowledge and expertise of payroll taxes for employers and the laws associated with such.  Give them a call at (972) 426-2553 and let them help you!

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What Our Clients Have to Say

Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
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