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Forms Required When a Business Has Employees (2)
Forms Required When a Business Has Employees (2)
Forms Required When a Business Has Employees (2) (In the United States)
Social Security and Medicare Taxes Social Security and Medicare taxes are withheld from employee's wages each pay date.
2021 Social Security limit: $142,800
Social Security tax: 12.4% - 6.2% for employee - 6.2% for employer
Medicare tax: 2.9% - 1.45% for employee - 1.45% for employer
The employer's share of social security taxes of 6.2% is on wages up to $142,800 (in 2021). The Medicare amount of 1.45% is on all wages.
Total deposit (your share and the employee's share) is 15.30%.
Federal Unemployment Tax (FUTA) Only the employers pays FUTA tax.
You are subject to FUTA tax in 2020 if you paid wages of $1500 or more in any calendar quarter in 2019 or 2020 OR if you had one or more employees for at least some part of a day in any 20 or more different weeks in 2019 or 20 or more different weeks in 2020.
The FUTA tax rate is 6.0%. The tax applies to the first $7000 you pay each employees as wages during the year. Generally you can take a credit against your FUTA Tax for amounts paid to state unemployement tax funds. This credit cannot be more than 5.4% of taxable wages. If you are entitled to the maximum amount, your FUTA tax rate after the credit is 0.6%.
[References]
1. Topic No. 751 Social Security and Medicare Withholding Rates, IRS, United States of America https://www.irs.gov/taxtopics/tc751
2. Topic No. 759 Form 940 – Employer's Annual Federal Unemployment (FUTA) Tax Return – Filing and Deposit Requirements, IRS, United States of America https://www.irs.gov/taxtopics/tc759
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