Social Security Withholding Lawyer Services
Social Security withholding is one of the more important task required by law of an employer. As an employer you are required to withhold income tax and also social security and Medicare taxes from your employee's wages. Furthermore you are required to pay a matching amount of social security and Medicare taxes for your employees. Have a new employer complete IRS form W-4. You will use this form to calculate the amount of income tax to withhold from the employee's wages. Most of the states have income tax structures that are based on the system, so you will use the W-4 to calculate the amount of income tax to withhold as well. Social security and Medicare taxes, also known as FICA taxes must be withheld from your employees' wages. As an employer, you must also pay a matching amount of FICA taxes for your employees. Currently the social security tax rate is 6.2%. You are required to withhold 6.2% of an employee's wages for social security taxes and to pay a matching amount in social security taxes until the employee reaches the wage base for the year. The Medicare tax rate is 2.9% for the employee and the employer. You will withhold 1.45% of an employee's wages and pay a matching amount for Medicare tax. There is no wage base for the Medicare portion of the FICA tax. Both the employer and the employee continue to pay Medicare tax, no matter how much is earned.
Determining the amount to be withheld
Your employer determines the amount to be withheld from the amount of income you earn and the information provided on your IRS form W-4. You can also choose to be withheld at the single rate or the lower married late. The amount withheld of you is affected by the number of deductions claimed.
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New employers also must make federal income tax and FICA withholdings. Social Security Tax Withholding is equal to 6.2 percent of gross wages and Medicare tax withholding is equal to 1.45 percent of gross wages. The combined rate of 7.65 percent is deducted from the employee's gross pay.
The employer also must pay State and Federal Unemployment Taxes (SUTA and FUTA). The FUTA rate is 6.2 %, but you can take a credit of up to 5.4% for SUTA taxes that you pay. If you are eligible for the maximum credit your FUTA rate will be 0.8%. You will need to check with your state about SUTA tax rates and the wage base. Generally, your SUTA tax rate is based on the amount of unemployment claims that are filed by employees that you have terminated. When your business is new, your SUTA tax rate starts at the maximum and declines if you build a history of few claims.
The withholding of income tax is part of the state's pay-as-you-go plan of income tax collection. Its purpose is to collect income tax at the source, as the wages are earned. As an employer, you must record sums that are withheld from employee wages in a ledger account to clearly indicate the amount of state tax withheld. These funds must be submitted to the state on the due date assigned to you.