FICA provides for a Federal system of old age insurance (OASI) and health insurance (HI). The old age, survivors, and disability insurance is financed by the social security tax. The health insurance is financed by the Medicare tax. Each of these taxes is reported separately.
Social security and Medicare taxes are levied on both employers and employees (unless you or your employees are not subject to these taxes). An employer must withhold and deposit the employee's withheld social security and Medicare taxes and the employer must pay a matching amount.
The employee tax rate for Medicare is 1.45% (amount withheld). The employer tax rate for Medicare tax is also 1.45% (2.9% total). There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax.
For more information go to the Internal Revenue Service Web Site.
State Unemployment Tax Act
SUTA is part of the joint federal / state unemployment system. It provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a Federal and a state unemployment tax. In all but three states (Alaska, New Jersey and Pennsylvania) this tax is not deducted from the employee's wages. The taxable wage base varies from state to state. See below:
Alabama State Unemployment Division
Alaska State Unemployment Division
Arizona Department of Economic Security
Arkansas Employment Security Department
California Employment Development Department
Colorado Department of Labor and Employment
Connecticut Department of Labor
Delaware Department of Labor
District of Columbia Department of Employment Services
Florida Workforce Innovation
Georgia Department of Labor
Hawaii Department of Labor and Industrial Relations
Idaho Department of Labor
Illinois Employment Security
Indiana Department of Workforce Development
Iowa Unemployment Insurance Information for Employers
Kansas Department of Labor
Kentucky Office of Employment and Training
Louisiana Department of Labor
Maine Unemployment Insurance Tax Division
Maryland Division of Unemployment Insurance
Massachusetts Division of Unemployment Assistance
Michigan Unemployment Insurance Agency
Minnesota Unemployment Insurance
Mississippi Department of Employment Security
Missouri Department of Labor and Industrial Relations
Montana Department of Labor & Industry
Nebraska Workforce Development
Nevada Department of Employment, Training & Rehabilitation
New Hampshire Department of Employment Security
New Jersey Department of Labor and Workforce Development
New Mexico Department of Labor
New York Department of Labor
North Carolina Employment Security Commission
North Dakota Department of Labor
Ohio Bureau of Employment Services
Oklahoma Employment Security Commission
Oregon Unemployment Insurance Tax
Pennsylvania Department of Labor & Industry
Rhode Island Unemployment Insurance
South Carolina Unemployment Insurance
South Dakota Department of Labor
Tennessee Department of Labor & Workforce Development
Texas Texas Workforce
Utah Unemployment Insurance
Vermont Department of Labor
Virginia Employment Commission
Washington Department of Labor and Industries
West Virginia Bureau of Employment Programs
Wisconsin Unemployment Insurance
Wyoming Department of Employment
California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island provide temporary disability benefits for employees who are disabled by a non-work related illness or injury through a tax supported state fund. A tax payment similar to the unemployment insurance tax may be required by both the employee and employer. Contact any state in which you have employees to determine your responsibility for paying these taxes.
For more information on Employer Taxes refer to The Payroll Source distributed by the American Payroll Association or Bureau of National Affairs' Web Site.
The Federal Unemployment Tax Act, with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. FUTA tax is an employer tax only, and is not deducted from the employee’s wages.
The tax rate for federal unemployment taxes is 6.2 percent of covered wages, which includes a 0.2 percent surtax. The rate is in effect through 2007. The taxes are assessed on the first $7,000.00 paid to covered employees each year.
The law provides a credit for state unemployment taxes paid. This credit permits employers to deduct timely state contributions from federal unemployment taxes due. With the maximum credit allowed, the net federal rate for unemployment taxes is 0.8 percent through 2007, 0.6 percent in 2008 and thereafter. Back To Top
Federal income tax, Social Security, and Medicare taxes are reported on IRS form 941(Employer's Quarterly Federal Tax Return).
For more information go to the Internal Revenue Service Web site.
Quarterly Reporting to States (State Unemployment Taxes)
State Unemployment wages and taxes are reported on state specific forms. See below state Web sites for more information.
Alabama Department of Industrial Relations
Alaska Department of Labor and Workforce Development
Arizona Industrial Commission
Delaware Department of Labor, Unemployment Insurance Division
Illinois Department of Employment Security
Iowa Workforce Development
Maine Department of Labor
Massachusetts Workforce Development
Michigan Department of Labor and Economic Growth
Minnesota Unemployment Insurance Program
Montana Unemployment Insurance Division
Nebraska Department of Revenue
New Hampshire Employment Security
North Carolina Employment Security Commission
North Dakota Job Service North Dakota
Ohio Department of Job and Family Services
Oregon Employment Department
Pennsylvania Department of Labor and Industry
Puerto Rico Office of the Governor
Rhode Island Division of Taxation
South Carolina Employment Security Commission
Tennessee Employment Security Division
Utah Department of Workforce Services
Washington Employment Security Department
Wisconsin Department of Workforce Development
Federal Unemployment wages and taxes are reported on IRS Form 940 (Employer's Annual Federal Unemployment Tax Return).
Employers must file Form W-2 with the IRS for each employee from whom: Income, social security, or Medicare taxes have been withheld, or Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee's Withholding Allowance Certificate.
Every employer engaged in a trade or business that pays remuneration for services performed by an employee, including non-cash payments, must furnish a Form W-2 to each employee by January 31. This applies to any employee even if related to the employer.
The official Form W-2 comes with 6 copies. Copy A must be sent to the Social Security Administration with the transmittal Form W-3 by March 1, 1999. Form W-3 is used to transmit the W-2s and contains figures reflecting the total of all the W-2s being sent. The address for mailing Copy A of the W-2s and the W-3 Form is listed in the W-2 and W3 instructions. Keep Copy D of Form W-2 for your own records. Send Copy 1 to your State Tax Department for requirements and transmittal information. You must give the remaining copies to the employee by February 1, 1999. If an employee stops working for you before the end of the year, you may give him or her (your former employee) the copies anytime prior to February 1, 1999 unless he asks for the Form W-2 prior to the end of the year. If the employee asks for the Form W-2, you must give the copies to the employee within 30 days of the request or final wage payment, whichever is later.
For more information go to the Internal Revenue Service Web site.
If you discover an error (such as incorrect name, SSN, or any wage or tax amount) on an employee's W-2 after sending it to the Social Security Administration, you should submit a Form W-2c. You must also submit a transmittal Form W-3c with the Form W-2c, unless you are changing only the employee's name or Social Security number.
Anyone required to file Form W-2 must file Form W-3, Transmittal of Wage and Tax Statements, with Copy A of Forms W-2. Form W-3 is used to transmit the W-2's and contains figures reflecting the total of all W-2's being sent. Make a copy of Form W-3 and keep it with Copy D (for Employer) of Forms W-2 of your records. Be sure to use Form W-3 for the correct year. Form W-3 must be filed with the Social Security Administration.
Form W-3 can be obtained at the Internal Revenue Service Web site.
Quarterly and Annual Reporting by State (State and Local Tax Requirements - varies by State)
All states, excluding Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming, have state personal income taxes and require employers to withhold a percentage from employees' wages for these purposes. Also, many localities have income taxes for which they require withholding. For more information about state and local withholding filing requirements, please contact the appropriate tax agency.
Alabama Department of Revenue
Arizona Department of Revenue
Arkansas Department of Finance and Administration
Colorado Department of Revenue
Connecticut Department of Revenue Services
Delaware Division of Revenue
District of Columbia Office of Tax and Revenue
Georgia Department of Revenue Taxpayer Services Division
Hawaii Department of Taxation Taxpayers Services Branch
Idaho State Tax Commission
Illinois Department of Revenue
Indiana Department of Revenue
Iowa Department of Revenue
Kansas Department of Revenue
Kentucky Department of Revenue
Louisiana Department of Revenue
Maine Employer Resources
Maryland Comptroller of Maryland
Massachusetts Department of Revenue
Michigan Department of the Treasury
Minnesota Department of Revenue
Mississippi State Tax Commission
Missouri Department of Revenue
Montana Department of Revenue
New Jersey Division of Taxation
New Mexico Taxation and Revenue Department
New York Department of Taxation and Finance
North Carolina Department of Revenue
North Dakota State Tax Commission
Ohio Department of Taxation
Oklahoma Oklahoma Tax Commission
Oregon Department of Revenue
Pennsylvania Department of Revenue
South Carolina Department of Revenue
Utah State Tax Commission
Vermont Department of Taxes
Virginia Department of Taxation
West Virginia State Tax Commission
Wisconsin Department of Revenue
One of the newest responsibilities facing employers is the reporting of newly hired or rehired employees to state agencies. This reporting is used to aid in the collection of child support and/or to uncover fraud and abuse in unemployment compensation, worker's compensation, and public assistance (welfare) benefit programs.
For more information refer to The Payroll Source distributed by the American Payroll Association.
There are different laws regarding maintaining proper records. Penalties can be assessed for non-compliance. There are many record keeping and record retention requirements of different payroll laws. Listed below are laws you'll want to keep up-to-date on:1) Federal Wage - Hour Law (FLSA)2) Internal Revenue Code3) Federal Anti-Discrimination Laws4) Civil Rights Act of 1964 (Title VII)5) Age Discrimination in Employment Act of 1967 (ADEA)6) Government Contractor Regulations7) Immigration Reform and Control Act8) Family and Medical Leave Act9) State Unemployment Insurance Laws10) State Wage Hour Laws11) Unclaimed Wages12) Direct Deposit Considerations
EIN's are assigned to sole proprietors, corporations, partnerships, estates, trusts, and other entities for tax filing and reporting purposes. The EIN is a nine-digit number the IRS issues. The digits are arranged as follows: 00-0000000. The EIN identifies an employer to the IRS and SSA.
An employer without an EIN may request one on Form SS-4, Application for Employer Identification Number. This form can be obtained by calling the IRS at 1-800-TAX-FORM (1-800-829-3676). Form SS-4 has information on how to apply for an EIN by mail or by telephone.
For more information go to the Internal Revenue Service Web site. Back To Top