FICA Rate for 2011

The Federal Insurance Contributions Act or (FICA) has the authority to collect payroll taxes for Social Security benefits. The FICA tax is the tool used for collecting funds for our future Social Security benefits.

How Employers can Calculate FICA Tax Rates for Employees

As a business owner you will need to complete your payroll tax for each employee. If you’re new to this process you may wonder where to begin and how to calculate FICA tax for employees.

Your employee works for a certain amount of hours and accumulates his or her gross pay. The employer is responsible for subtracting the statutory payroll tax deductions, followed by the voluntary payroll deductions which leaves the net pay or otherwise known as the take home pay amount.

FICA Rates

Payroll taxes must be withheld from the employee’s check. There’s no getting around this, it’s the law. The employer takes the withholdings and hands them over to several agencies on behalf of the employee.

Here are the payroll tax categories;

Federal Income Tax Withholding - (Based on withholding Tables IRS Publication 15)

Social Security Tax Withholding - (6.2% up the annual maximum)

Medicare Tax Withholding - (1.45%)

State Income Tax Withholding - (Each state is different)

Local Tax Withholdings - (City, county, school, state disability…unemployment insurance…etc.)

Voluntary payroll tax deductions are up to each employee to choose whether or not to participate in such services. The voluntary payroll deductions include such items as, health insurance premiums, uniforms, life insurance premiums, retirement plan contributions, employee stock purchase plans, meals and other job related expenses.

Employer Payroll Responsibilities

As an employer, your job continues on with paying your portion of payroll taxes. The FICA tax consists of Social Security and Medicare tax. The employer and the employee will pay these taxes, each paying their half of tax due.

The employer is set on a tax paying schedule which is the same for all employers. The employer must make federal deposits, submit an annual federal unemployment tax return, an employer’s quarterly payroll return, annual return of federal withheld income tax, an d wage and tax statements.

If this sounds confusing and you would like help with paying FICA taxes for your employees, you should consider getting help from QuickBooks. They will provide you with the necessary forms and will guide you through the process of paying your payroll taxes.

For more information on federal payroll tax visit QuickBooks Payroll today.