Payroll tax form is federal, state and local taxes withheld from an employee’s paycheck by the employer. In order to properly calculate what your payroll tax should be, you need to know the current tax rates. For examples, Social Security tax for 2020 is 6.2% on employees and 12.4% on the self-employed.
Content of Payroll Tax Form
They include advance payment of Income Tax, Social Security, Medicare or various insurances, and also, taxes paid by the employer based on the employee’s wages. Because payroll taxes fall exclusively on wages and not on returns to financial or physical investments, payroll taxes may contribute to underinvestment in human capital such as higher education.
Annual Payroll Tax Form
Basic Payroll Tax Form
Federal Payroll Tax Form
Quarterly Payroll Tax Form
Sample California Payroll Tax Form
Sample Employer Withholding Tax Form
Sample Payroll Tax Form 940
Classification of Payroll Tax
Below are the basic kind of form that we may encounter both as employee and employer :
1. Form W-2
Form W-2 is a statement prepared by an employer for individuals who were employed at any time during the previous year.
It also known as a statement of earnings or Wage and Tax Statement, the W-2 Form indicates the total gross earnings of an employee. It shows the employee’s Social Security earnings, Medicare earnings and federal and state taxes withheld from wages over the previous year.
2. Form W-4
Form W-4 is known as Employee’s Withholding Allowance Certificate. Employees are required to complete and submit it no later than their first day of employment.With this form submitted, the employer can withhold the correct federal income tax from each paycheck.
The form asks for the employee’s information, such as their name, Social Security number, address, and marital status. And, the form asks for the employee’s withholding adjustments, such as claiming dependents.
3. Form I-9
Form I-9, Employment Eligibility Verification, is used to verify the identity and employment authorization of individuals hired for employment in the United States.It’s the responsibility of every employer to retain a completed copy of Form I-9 for each individual on their payroll.
Unlike the forms that were mentioned before, Form I-9 requires both the employer and employee to provide information. The employee responsible for the information that was written in the first section, while the latter fill out the rest of the form.
Steps To Calculate Payroll Taxes Manually
Step 1 – Complete the W-4 form. Employees need to complete Form W-4 to document their filing status and keep track of personal allowances in order to get paid.
Step 2 – Sign up for Employer Identification Numbers. An EIN is also known as the Federal Employer Identification Number (FEIN) or the Federal Tax Identification Number, is an unique nine-digit number assigned by the Internal Revenue Service. If you don’t have one, you may check your state’s employer resources for more details.
Step 3 – Choose your payroll schedule. You need to add three important dates to your calendar, and that is: employee pay dates, tax payment due dates, and tax filing deadlines.
Step 4 – Calculate and withhold income taxes. You need to determine which federal and state taxes to withhold from your employees’ pay by using the IRS Withholding Calculator and your state’s resource or a reliable paycheck calculator.
Step 5 – Pay taxes. When it’s time to pay taxes, you need to submit your federal, state, and local tax deposits, as applicable.
Step 6 – File tax forms & employee W-2s. And last but not least, don’t forget about preparing your annual filings and W-2s at the end of the year.
It is sometimes claimed that the economic burden of the payroll tax form falls almost entirely on the worker, regardless of whether the tax is remitted by the employer or the employee, as the employers’ share of payroll taxes is passed on to employees in the form of lower wages that would otherwise be paid.