If you are an employee, there are certain things you should know about payroll taxes. It’s important to understand how payroll taxes work so that you can be sure your employer is withholding the correct amount from your paycheck and so that you can correctly file your taxes. Also, if you are ever audited, it will be helpful to know what payroll taxes are and how they work. Here are 6 important things every employee should know about payroll taxes.
1. What are payroll taxes?
Payroll taxes are taxes that are withheld from your paycheck by your employer. The funds are then sent to the government to pay for things like Social Security and Medicare. According to https://www.zenefits.com/workest/where-do-your-payroll-taxes-go/ your taxes rate for Social Security is 6.2% and Medicare is 1.45%. Additionally, your employer likely pays a portion of these taxes as well. It’s important to note that payroll taxes are not income taxes. This is a common misconception. It’s also important to know that payroll taxes are not optional. Your employer is required by law to withhold these taxes from your paycheck and send them to the government.
2. How are payroll taxes calculated?
Your payroll taxes are calculated based on the amount of income you earn. The more money you make, the higher your payroll taxes will be. However, there is a limit to how much can be withheld from Social Security taxes. For 2019, the wage base limit is $132,900. This means that if you make more than $132,900, your employer will not withhold any additional Social Security taxes from your paycheck.
Additionally, there is no limit to how much can be withheld from Medicare taxes. It’s important to note that payroll taxes are not calculated based on your deductions.
3. What are the different types of payroll taxes?
There are four different types of payroll taxes: Social Security, Medicare, Federal Unemployment Tax, and State Unemployment Tax. Social Security and Medicare taxes are withheld from your paycheck by your employer and sent to the government. Federal Unemployment Tax is paid by your employer and is used to provide unemployment benefits to workers who have lost their job. State Unemployment Tax varies by state, but is also paid by your employer and is used to provide unemployment benefits to workers who have lost their job.
4. When are payroll taxes due?
Your employer is required to withhold payroll taxes from your paycheck and send them to the government on a quarterly basis. However, if you are self-employed, you are required to pay your payroll taxes on a monthly or semi-weekly basis. Additionally, if you have employees, you are required to pay your payroll taxes on a semi-weekly or monthly basis.
It’s important to note that you are responsible for paying your payroll taxes even if your employer doesn’t withhold them from your paycheck. This is why it’s important to keep track of your income and payroll taxes so that you can be sure you are paying the correct amount.
5. What happens if I don’t pay my payroll taxes?
If you don’t pay your payroll taxes, you could be subject to penalties and interest. Additionally, if you are self-employed, you could be responsible for paying the entire amount of payroll taxes yourself. If you have employees, you could also be responsible for paying their share of the payroll taxes. Payroll taxes are taken very seriously by the government and it’s important to make sure you are paying them on time and in full. It’s also important to keep track of your payroll taxes so that you can be sure you are paying the correct amount.
6. Where can I get more information about payroll taxes?
If you need more information about payroll taxes, you can contact the IRS or your state tax agency. You can also speak to your employer or accountant. Payroll taxes can be complex, but there are resources available to help you understand them. Additionally, there are software programs that can help you keep track of your payroll taxes and make sure you are paying the correct amount. It’s important to stay on top of your payroll taxes so that you don’t end up owing the government any money.
Payroll taxes are an important part of the tax system. They are used to fund Social Security and Medicare, as well as other government programs. It’s important to know how payroll taxes are calculated and what the different types are. Additionally, it’s important to know when payroll taxes are due and what happens if you don’t pay them. This information will help you make sure you are compliant with the tax laws and avoid any penalties.
