It’s completely understandable why people have questions about payroll, there has been a lot of media attention around the tax reform changes and what that means to your company’s paycheck so we can go through some FAQ and I think hopefully put everyone at ease a little bit in terms of what this means to your paycheck because really for payroll it’s kind of business as usual the IRS generally updates their tax tables every year anyway so there’s not a whole lot different in terms of what that means to your pay there are some changes and we can we can go through that.
- What are Payroll Taxes
Payroll taxes include amounts that are taken out of an employee’s paycheck to pay for FICA insurance which is the Federal Insurance Contributions Act. Payroll taxes also include some additional amounts to pay for unemployment insurance and in some states disability insurance. FICA is what pays for Social Security and Medicare the withholding amounts for Social Security are shared equally between the employer and the employee.
- When to Pay Payroll Taxes
It is important to understand the difference between paying tax and filing a tax return the IRS requires that you pay tax then filed a return which differs from many states that require you to file and pay payroll taxes simultaneously the dollar amount of payroll taxes an employer owes in a given year determines their tax deposit frequency in general if you owe more than $50,000 per year in payroll taxes then you are required to pay your payroll taxes semi-weekly if your payroll taxes are under $50,000 in a year you are a monthly tax depositor semi-weekly depositors must pay the tax by the following wednesday or friday after the employees check date. Monthly depositors are required to pay the tax by the 15th of the following month.
- How do I Calculate my Payroll Taxes
Whenever you are trying to determine withholding taxes you always need to use the employee’s w-4 form this form will detail all of the information that you need in order to make this calculation we’re going to use this fictitious character John Doe. John is single and he claims only one allowance remember that this information is filled out by the employee so this is the information that you must use when calculating their withholding tax John is paid on a bi-weekly basis which means that he’s paid every other week and his wages for this pay period is 720 dollars so this is the information that we need to use in order to make the calculation. So the first thing that we need to do the first step is that the IRS in publication 15 has given us a percentage method table so it doesn’t matter at this point how many allowances it just matters what pay period you’re using so what you want to do is multiply one withholding allowance by the amounts and you want to multiply that by the number with boating allowance that they have claimed so for example John is paid on a bi-weekly basis so we’re going to use the second line which is one hundred fifty one dollars and ninety cents John has only claimed one allowance so this one hundred and fifty one dollars and ninety cents is what we need to use for John.
Check out http://www.payrollserviceaustralia.com.au for more informations and help.