What is employment tax

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Payroll Tax Basics. Employer Tax Obligations. When to Deposit Employment Taxes. By Jean Murray. Learn about our editorial policies. Updated on May 01, Employers Must: Withhold federal income taxes from employee pay Withhold FICA taxes from employee pay and pay those taxes, plus an equal amount from your business Withhold any state income taxes from employee pay Withhold the Additional Medicare Tax for employee's earnings over a required threshold Pay federal and state unemployment taxes, based on the number of employees you have Pay workers' compensation fees to state or federal agencies File Form quarterly.

If you are self-employed, these deposits are covered by your quarterly tax payments. If you are self-employed, visit the Self-Employed Individuals Tax Center page for information about your tax obligations. Understand the various types of taxes you need to deposit and report such as, federal income tax, social security and Medicare taxes and Federal Unemployment FUTA Tax.

Calculate Your Employment Taxes. You must deposit federal income tax withheld and both the employer and employee social security and Medicare taxes. You also must report on the taxes you deposit, as well as report wages, tips and other compensation paid to an employee.

Employers are also responsible for paying state and local city, county, etc. As with federal payroll tax, part of this tax is employer paid and part is employee paid. In addition to state payroll tax State Unemployment Tax, or SUTA , employers are also responsible for remitting state income tax on behalf of their employees. Have all your SUTA questions answered in just a 3 minute read. You can find out more about payroll tax in your state and local area there.

Payroll tax is complex. The calculations are nitpicky and penalties are steep. We highly recommend outsourcing your payroll to a company like Gusto. When it comes time to record payroll costs on your books, Bench can take care of that for you. Learn more about how we are saving small business owners hours of admin every month. We're an online bookkeeping service powered by real humans. Bench gives you a dedicated bookkeeper supported by a team of knowledgeable small business experts.

Your bookkeeping team imports bank statements, categorizes transactions, and prepares financial statements every month. Get started with a free month of bookkeeping. This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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