Payroll Tax Rates
Are you a business owner and responsible for paying payroll tax? If so, you’ll need to know your responsibilities in having payroll and paying the payroll tax for your employees. So now you may be wondering what your payroll tax rates may be.
There are two different kinds of payroll tax. The first is the employer's responsibilities of withholding the required amount from the employee's pay, which is also most commonly known as withholding tax. This is money that comes out of the employee's salary.
Withholding tax is a portion of the employee's income that is set aside for government taxes. Although the employee does not yet owe the money, the amount is what is predicted that the employee will eventually owe. What the employee's payroll tax rate will eventually be is determined by the government.
The second kind of payroll tax comes not from the employee's salary, but rather from the employer's own funds. This payroll tax rate is determined by a fixed charge or by a proportionate amount to the employee's pay.
The IRS mandates the federal withholding tables. Having the most up-to-date tax tables is a tremendous help in finding the correct payroll tax rate for your situation. As the employer, make sure you are deducting the correct amount from your employees to cover their federal tax, Medicare and Social Security tax from each paycheck.
Publication 15, which is the employer’s tax guide, is available from the IRS. This publication is available both online and in print. Publication 15 offers guidance to the employer in making sure you follow the necessary tax laws. For example, for 2010, the employer has a choice of filing a form 941 for quarterly taxes instead of a form 944 for annual taxes. This resource would be beneficial to an employer calculating the payroll tax rate amounts on his or her own.
If this sounds confusing or complex, there are services available that will take the stress and headache away. As an employer, there are services that will do the calculations for you, and they are updated with the most current tax tables. These services are available at QuickBooks Payroll Tax Calculator. You can try the payroll tax rates calculator free for 30 days, so go ahead and see how they can help your business.