Employment_Taxes___What_Are_They_

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					Title:
Employment Taxes – What Are They?

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304

Summary:
If you have employees, you are responsible for paying a variety of taxes
at the federal, state, and local levels. You must also withhold certain
taxes from the paychecks of your employees. So, what are employment
taxes?


Keywords:
employment taxes


Article Body:
If you have employees, you are responsible for paying a variety of taxes
at the federal, state, and local levels. You must also withhold certain
taxes from the paychecks of your employees. So, what are employment
taxes?

Employment taxes include the following.

1. Federal income tax withholding

2. Social Security and Medicare taxes

3. Federal unemployment tax (FUTA).

Federal Income Taxes/Social Security and Medicare Taxes

You generally must withhold federal income tax from wages paid to an
employee. Form W-4 is used to determine the specific amount, although
most payroll services or your accountant will do this for you.

Social security and Medicare taxes pay for benefits that workers and
families receive under the Federal Insurance Contributions Act (FICA).
Social security tax pays for benefits for the retired, survivors, and
disability insurance distribution provisions of FICA. Medicare tax pays
for benefits under the medical care provisions of FICA. As an employer,
you must withhold a percentage of these taxes from employee and match the
withholding amount.

In general, you must deposit these taxes by check or cash to an
authorized financial institution, typically your bank. Check with your
tax professional to make sure you are not required to use the Electronic
Federal Tax Deposit System (EFTPS). Regardless of the payment method, you
will then report them on Form 941, the Employer’s Quarterly Federal Tax
Return

Federal Unemployment Tax (FUTA)
FUTA is a combined federal and state program that provides unemployment
compensation to the unemployed. As a business owner, you are solely
responsible for paying this tax, to wit, nothing is withheld from the
paychecks of your employees. FUTA is determined by using Form 940, but
you are encouraged to use a tax professional to determine payment
amounts.

Employment taxes can be frustrating for a small business owner. They are,
unfortunately, a necessary evil as your business grows.

				
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