What Are Employment Taxes?

Employment taxes are imposed for a variety of purposes such as social security tax, Medicare tax, unemployment insurance, and state disability programs. Some of these taxes are paid for by the employee, some by the employer, and sometimes both the employee and the employer make the "contribution." Employment taxes arise under both federal and state tax systems.

Unlike employees, who file taxes annually, businesses are responsible for filing taxes quarterly. This means that your employer actually files his taxes every three months. Even someone who is self-employed is held to this same expectation and actually pays twice as many taxes as someone who is employed by someone else.

Calculating Tax Debt

Another required tax that employers must pay is the federal unemployment tax. This means that every employer in the country is responsible for paying into

the federal unemployment fund. This amount is set annually by the federal government and must be paid quarterly.

Finally, anyone who is self-employed must pay the self-employment tax in addition to his standard income taxes. This self-employment tax is comprised of the total annual amount due for the person's Medicare and social security. However, it is the amount the employer pays, not the amount a regular employee pays. So, instead of owing the $2,000 that an employed person would have owed, a self-employed person would owe $4,000.

If you are trying to sort through taxes for a new business or the guidelines for self-employment taxes, consult with a tax advisor or tax attorney for tips on proper payment and calculation techniques as well as available credits and deductions. For more information on employment taxes, visit: http://www.irs.gov/businesses/small/article/0,,id=172179,00.html

Source: law.freeadvice.com

Category: Taxes

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