By:Richard A. Chapo If you have employees, you are responsible for paying a variety of taxes at the federal, state, and local levels. You must also withhold certain taxes from the paychecks of your employees. So, what are employment taxes? Employment taxes include the following. 1. Federal income tax withholding 2. Social Security and Medicare taxes 3. Federal unemployment tax (FUTA). Federal Income Taxes/Social Security and Medicare Taxes You generally must withhold federal income tax from wages paid to an employee. Form W-4 is used to determine the specific amount, although most payroll services or your accountant will do this for you. Social security and Medicare taxes pay for benefits that workers and families receive under the Federal Insurance Contributions Act (FICA). Social security tax pays for benefits for the retired, survivors, and disability insurance distribution provisions of FICA. Medicare tax pays for benefits under the medical care provisions of FICA. As an employer, you must withhold a percentage of these taxes from employee and match the withholding amount. In general, you must deposit these taxes by check or cash to an authorized financial institution, typically your bank. Check with your tax professional to make sure you are not required to use the Electronic Federal Tax Deposit System (EFTPS). Regardless of the payment method, you will then report them on Form 941, the Employer’s Quarterly Federal Tax Return Federal Unemployment Tax (FUTA) FUTA is a combined federal and state program that provides unemployment compensation to the unemployed. As a business owner, you are solely responsible for paying this tax, to wit, nothing is withheld from the paychecks of your employees. FUTA is determined by using Form 940, but you are encouraged to use a tax professional to determine payment amounts. Employment taxes can be frustrating for a small business owner. They are, unfortunately, a necessary evil as your business grows. Article Source: http://www.redsofts.com/articles/ Richard Chapo is with www.businesstaxrecovery.com - recovering overpaid taxes for small businesses. Visit our article page - www.businesstaxrecovery.com/articles - to read more tax articles. More Articles from Taxes Category: Decoding the IRS Dependent Rules! How Do I Know When to Claim a Dependent? Small Business Tax Deductions - Top 5 What Would It Mean To Pass The FairTax Plan? New Laws on Donating a Car Income Tax Software - The Best Ones On The Market Tax Planning - What Filing Choices Are There? A Simple Introduction To Filing Electronic Taxes Why Our Political Leaders Should Embrace the Fair Tax Plan. Using This Years Taxes to Save On Next Years Taxes What to Do If You Can’t Pay Your Taxes Adult ADD And Taxes Create Tax Savings And Transfer Wealth To Your Child With A Roth IRA Help Me Prepare My Taxes Identity Theft – Impacting Your Taxes? The Skinny on 1031 Exchange: Maximizing Profits by Minimizing your Tax Liability

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