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Calculating and Paying Federal Taxes Go to topics
Three taxes are paid together: social security, Medicare, and employee's federal income tax. Tax deposit are reconciled with IRS 941 each quarter.
 
Most new employers are automatically monthly depositors for their first year.
 
Forms to use  EFTPS Online payment
Calculate Payroll

Tax rates 
Social Security (FICA)12.4% on first
$118,500 income
Employee pays 1/2 through payroll deductions.
Employer pays the remainder.

 
Medicare2.9% all income Employee pays 1/2 through payroll deductions.
Employer pays the remainder.
 
Federal Income
Tax
variesEmployee pays through payroll deductions.

If any employee earns more than $200,000 ($250,000 for married filing jointly), additional Medicare tax must be deducted from the employee's wages and paid with other employment taxes. Click here for details.
 
Example  Social security Diane earns $60,000 per year. Beginning every January, or whenever Diane is first employed, you deduct 6.2% from Diane's gross pay AND your company pays 6.2% times her gross salary for Diane's social security account - total 12.4%. When she has earned $118,500 for the year, social security payments stop.

Medicare In addition to social security deductions described above, you also deduct 1.45% from Diane's gross pay AND your company pays 1.45% times her gross salary for Diane's Medicare account - total 2.9%. There isn't a cap for Medicare, so these taxes are paid throughout the year.

Employee Federal Income Tax Deduct Employee Income Tax from Diane's gross pay according to the Circular E tax schedule, using the allowances she claimed on her W-4. These deductions should ALWAYS be made, regardless of Diane's cumulative earnings.

 
Due date  Monthly by the 15th day of the following month for first year employers and employers with under $50,000 in tax liabilities (approximately $60,000 in annual payroll).
 
Any employer with more than $100,000 in unpaid tax liabilities at any time must pay taxes by the next bank day.

In November of each year, the IRS will notify you about any changes to your deposit requirements. If you have more than $50,000 in deposits during the year, you will become a semi-weekly depositor. When this happens, taxes will be due:

 
If your payday isTaxes are due
Saturday Friday
Sunday Friday
MondayFriday
TuesdayFriday
Wednesday next Wednesday
Thursdaynext Wednesday
Fridaynext Wednesday
 
Fast growing company?  If a monthly depositor accumulates $100,000 in unpaid taxes at any time, taxes must be paid by the next business day and for the rest of the year, taxes must be paid on a semi-weekly basis as described above.
 
To pay  
 
Questions?  Call the IRS information hotline (800) 829-4933. For withholding schedules, call (800) 829-3676 or obtain them online at http://apps.irs.gov/app/picklist/list/formsPublications.html.