If you run a small company with employees, you’re legally obligated to deduct certain taxes from their paychecks. Numerous federal, state, and local levies fall under this category.
Payroll taxes paid to the federal government consist of:
Taking Social Security and Medicare out of a worker’s paycheck at the federal level
Income taxation for federal unemployment
The Federal Insurance Contributions Act guarantees certain benefits to workers and their families.
Expenditures for the Social Security System
Costs of Medicare
A portion of these taxes is deducted from your employees’ paychecks. To balance the books, you make a personal contribution of the same amount.
Unemployed workers receive benefits from the federal government in the form of an unemployment check. This tax is reported and paid independently of the following taxes:
The Amount of Money Taken Out for Social Security and Medicare
You must use your own money to cover your share of federal unemployment tax. No part of this tax is paid by or withheld from an employee’s salary.
Making tax payments
Both of these items are typically required to be submitted through the EFTPS:
Deductions from Earnings
Taxes for Social Security and Medicare paid by employees and employers
The IRS accepts payments through EFTPS because it is a free service offered by the U.S. Treasury. It paves the way for companies to make tax payments at any time over the phone or online.
Creating and submitting a W-2
Every employee should be issued a W-2 at the end of the year so that you can report their wages, tips, and other compensation. Information about the worker such as:
Income Tax Withheld
Funding for Medicare and Social Security
It is your responsibility to provide each employee with a copy of this form by January 31 following the calendar year in which wages were paid.
In addition to providing a copy to your employer, you must submit a W-2 to the SSA (SSA). Using Form W-3, you can get a quick overview of your W-2. Forms should be filed promptly. This guarantees that your workers will have adequate retirement benefits from Social Security.
Up to fifty W-2s can be prepared and submitted at once at no cost on www.ssa.gov. You can print out copies of the W-2 for your employees, state tax authorities, and others using the SSA’s online W-2 filing system.
All W-2 forms must be submitted to the SSA by the following dates:
- File by mail by the end of February; electronically by the end of March.
The wages paid to an employee who fits one of the following categories may qualify for a tax credit:
- Native American Family in Long-Term Need of Financial Support
Please refer to the following tax advice:
- The W-2 Form for Subtracting Business Expenses