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Payroll Taxes: A Quick Guide

The state cannot survive without taxes and that is why taxes are considered as the lifeblood of the government, without which, no funding can be provided for the programs and projects that it has to implement. There is a specific annual gross income for citizens in order for them to be subject to tax liabilities and they have the obligation to pay it regularly. The same is true for business owners and self employed individuals that are not properly monitored by taxing authorities. However, for employees, the burden of paying taxes is not made lighter for them because instead of personally attending to pay for their tax obligations, they can be charged as payroll taxes. Unlike requiring the employees to pay for the taxes on their own, payroll taces

For instance, the federal income tax is one of the types of taxes that can be automatically deducted from the pay of the employees. Now that the federal income tax is automatically deduced from the pay of the employees, the burden of paying they is not shifted to the employers. The social security tax which is a percentage taken from the employee’s income is also another type of tax liability that can be subject to payroll tax. Aside from all these tax liabilities, the unemployment tax, state income tax and the city and county income tax can also be deducted straight from the employee’s pay. Yet the tax laws in every state may vary so the charges on the payroll taxes are not always the same from one state to another.

Aside from all these tax liabilities, healthcare benefits of the employees can also be subject to payroll taxes and these include the medicare tax. The medicare tax is more of a healthcare insurance coverage for the employees.

Thanks to payroll taxes, there is now an assurance that every employee is compliant with tax laws since they can now pay for their tax liabilities directly through their employers. With that in mind, one can say that the employees can now have a better way to pay their taxes because the employers are the ones who are responsible of remitting the former’s tax obligations. If the employer fails to comply with such obligations, there is a penalty imposed so strict compliance is highly recommendable. These days, more and more companies are applying the payroll taxes setting for their employees. Thus, once an employee is hired, certain requirements will be demanded in order for this tax payment setting to apply.

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