Home
Free Stuff What's New
Free Newsletter
Free Spreadsheets
Customize Sheets
Learn Basic Accounting Basic Accounting
Bookkeeping
Basic Terms
Journal Entries
General Ledger
Financial Statements
Learn Accounting
Small Business Accounting Accounting 101
Basic Principles
Cash/Accrual
Break-Even Point
Cost Accounting
Petty Cash
Software Reviews
Free Biz Software
Business Budget Tips
Biz Deductions
Schedule C
Biz Receipts
Recordkeeping
Estimated Taxes
Tax Planning
Payroll Set Up Payroll
Payroll Taxes
1099-MISC
W-3
Form 941
How To Build a Site
Choose Accountant
Office Supplies
Create a Logo
Evernote
Resources Resources/Links
Site Search
FAQ
Contact Information About Me
Contact Me
Terms of Use

[?] Subscribe To This Site

XML RSS
Add to Google
Add to My Yahoo!
Add to My MSN
Subscribe with Bloglines

Learn How to Calculate Payroll Taxes, Withhold Payroll Taxes, and Remit Payroll Taxes


Calculate Payroll Taxes: If you are a small business owner with employees, you know paying them is not as simple as just writing out a check.


calculate payroll taxes


For most employees, you must withhold the following taxes:
  1. Federal income taxes (based upon information provided in a W-4)(Use the withholding charts from IRS Publication 15, also known as Circular E) to calculate payroll taxes.
  2. Social Security withholdings is 6.2% of gross wages. Note: For the year 2011 only, the employee portion of the Social Security tax has been reduced to 4.2%.
  3. Medicare withholdings is 1.45% of gross wages.

Your business must also match the FICA tax withheld from your employees’ paycheck.

The amount of the matching is:

  • Social security 6.2%
  • Medicare 1.45%

Total matching 7.65%

You report and pay these payroll taxes on IRS form 941.

Your payroll tax liability determines how often you have to report and pay your payroll taxes on the IRS form 941 to the IRS.

If your payroll tax liability is less than $2,500 for the entire quarter, your tax liability is considered small by the IRS and you simply prepare the IRS Form 941 on or before the due date the IRS has set up.

Your tax liability is considered large if for the previous two years, the average payroll tax liability is more than $50,000 per year. If your payroll liability is this high, my recommendation for you is to hire an experienced CPA.

If your tax liability is more than $2,500 per quarter and less than $50,000 per year, you fall into the medium category.

You must remit your payroll tax liability to the IRS on a monthly basis. For more information,read the Form 941 Instructions booklet.

Besides the taxes you report and pay on the IRS form 941, there are additional taxes you need to consider:

  • State incomes taxes -- where applicable (based upon information provided in a W-4)(Use the withholding charts from your state’s Income Tax Withholding form to calculate payroll taxes. Oklahoma’s is the OW-2

    Also find out which form you have to report and pay your employees’ state income taxes with. In Oklahoma ...it is the OW-9 (Oklahoma Employers Withholding Tax Return)

  • FUTA -- Your small business will probably need to report and pay Federal unemployment (FUTA) tax separately from Federal Income tax, and Social Security and Medicare taxes. You pay FUTA tax only from your own funds. Employees do not pay this tax or have it withheld from their pay.

    Refer to Publication 15, Employer's Tax Guide (PDF)(link above) chapter 14 for more information on FUTA tax. You will need to file this payroll tax on the IRS Form 940.

  • SUTA -- Check with your state’s tax and revenue department for details regarding the State Unemployment (SUTA) Tax as the taxable wage base varies from state to state.

Return to BasicAccountingHelp’s Home Page from Calculate Payroll Taxes


Looking for something?

Use SiteSearch



small business accounting software



AccountingCoach Pro

Master Accounting Package


Click Here for Details


Free Accounting Spreadsheets

when you...

subscribe to free newsletter:



Free Mileage Log Sheet

Free Mileage Log and what must be included on it.



How to Record Accounting Journal Entries

How to Record Accounting Journal Entries



Free Small Business Software

Free Small Business Software


Recommended Products

Outright - Free Yourself from Accounting



Site Build It!

Shoeboxed Works Great With Evernote