HR Support on Payroll Taxes

Editor's Note: Avoid penalties by properly calculating and withholding payroll taxes.

Rena PirsosOverview: Employers are required to withhold payroll taxes from each employee's pay and remit and report the amounts withheld to the federal government. Payroll taxes include:

  • Federal, state and local income taxes;
  • Social Security and Medicare (FICA) taxes;
  • Federal (FUTA) and state (SUI) unemployment insurance taxes; and
  • State disability and workers' compensation insurance taxes.

Employers that fail to fulfill these requirements are liable for serious penalties. HR managers that oversee payroll departments are responsible for avoiding such penalties by ensuring that payroll tax laws are complied with.

Trends: An employer must use IRS Form W-4 to calculate the amount of income tax to withhold from each employee's pay. The IRS completely redesigned Form W-4 starting with calendar year 2020 to comply with changes made by the 2017 federal tax reform law. Because the changes to the form are so extensive, an employer must know which employees it is required to provide the new form to, how those employees should complete the form, and how to use the information provided by each employee on the form to determine proper income tax withholding.

Author: Rena Pirsos, JD, Legal Editor

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