Question

For each of the following payroll-related taxes, indicate whether they apply to employees only, employers only, or both. Look up the current rates for each category.

·       Federal Income Tax

·       Medicare Tax

·       Social Security Tax

·       Federal Unemployment Compensation Tax

·       State Unemployment Compensation Tax

Answer these questions with a minimum posting of 250 words that is complete, thoughtful, and written in Standard English.

Answer 1

1) Federal Income Tax - They apply to employees only.

This tax is deducted from the salary paid to each employee and is deposited with the federal government. The tax rate for federal tax varies from employee to employee based on their salary structure. Their tax is deducted based on the slab rate for each year. For 2018, slab rate for individual is:-

Single

Taxable Income	Tax Rate
$0 - $9,525	10% of taxable income
$9,526 - $38,700	$952.50 plus 12% of the amount over $9,525
$38,701 - $82,500	$4,453.50 plus 22% of the amount over $38,700
$82,501 - $157,500	$14,089.50 plus 24% of the amount over $82,500
$157,501 - $200,000	$32,089.50 plus 32% of the amount over $157,500
$200,001 - $500,000	$45,689.50 plus 35% of the amount over $200,000
$500,001 or more	$150,689.50 plus 37% of the amount over $500,000

2) Medicare Tax - They apply to both.

Medicare tax is deducted from the salary paid to employees. The same amount of tax deducted from employees is contributed by the employer. Current rate for medicare tax rate is 1.45% on the first $200,000 of wages (and 2.35% for wages above $200,000).

3) Social Security Tax - They apply to both.

Social Security tax is deducted from the salary paid to employees. The same amount of tax deducted from employees is contributed by the employer. Current rate is 6.2% Social Security tax on the first $128,700 of wages (maximum tax is $7,960.80 [6.2% of $128,400])

4) Federal Unemployment Compensation Tax - They apply to employers only.

For 2018, the FUTA tax rate is 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year. The $7,000 is the federal wage base. The Federal Unemployment Tax Act (FUTA) is a payroll tax paid by employers on employee wages. The tax is 6.2% on the first $7,000 an employee earns; any earnings beyond $7,000 are not taxed.

5) State Unemployment Compensation Tax - They apply to employers only.

The State Unemployment Tax Act, better known asSUTA, is a form of payroll tax that all states require employers to pay for their employees. SUTA is a counterpart to FUTA, the federal unemployment insurance program. The SUTA rate varies from state to state.