Employment Taxes

Employers must deposit and report employment taxes. At the end of the year, employer must prepare and file Form W-2, Wage and Tax Statement to report wages, tips and other compensation paid to an employee. Use Form W-3, Transmittal of Wage and Tax Statements to transmit Forms W-2 to the Social Security Administration.

Federal Income Tax

Employers generally must withhold federal income tax from employees’ wages, and deposit this withholding with the IRS on a timely basis, based on the business and amount withheld.

Social Security and Medicare Taxes

Employers generally must withhold part of social security and Medicare taxes from employees’ wages and also pay a matching amount themselves. Employer must deposit the wages withheld. For 2013, the employee tax rate for social security increased to 6.2%. The social security wage base limit increased to $113,700.

Additional Medicare Tax

Beginning January 1, 2013, employers are responsible for withholding the 0.9% Additional Medicare Tax on an employee’s wages and compensation that exceeds a threshold amount based on the employee’s filing status. Employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages and compensation in excess of the threshold amount to an employee. There is no employer match for the Additional Medicare Tax.

Federal Unemployment (FUTA) Tax

Employers report and pay FUTA tax separately from Federal Income tax, and Social Security and Medicare taxes. Only Employers pay FUTA tax from their own funds. Employees do not pay this tax or have it withheld from their pay.

Self-Employment Tax

Self-Employment Tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most employees.

Forms

940 – FUTA Return
941 – Quarterly Payroll Return
Schedule SE – Self Employment
W-2
W-3