What payroll taxes are employers legally required to withhold from their workers’ pay?

In the United States, employers are required to withhold certain taxes from their employees’ paychecks (the exception is if the employee is an independent contractor, in which case he is responsible for paying his own taxes). Some of the tax withholding requirements vary by state, but these taxes usually include:

  • Federal, state and local taxes. The total amount withheld depends on the state and municipality, and also on the employee's tax status, as indicated on his W-4 form.
  • Social Security taxes. The laws are subject to change, but this tax is currently payable at 4.2 percent of the employee's income (for the year 2012) matched by a 6.2 percent employer contribution.
  • Medicare taxes. As of this writing, these amount to 1.45 percent of the employee's income.
  • Unemployment taxes. These vary by jurisdiction, but usually don't amount to more than $1,000 a year per employee.

Why does the government require businesses to collect and forward these taxes, rather than doing the job itself? Simple: it’s much easier to collect taxes from a company than from all its employees, who might be tempted to take inappropriate deductions or otherwise withhold the tax they owe.

The federal government takes payroll taxes very seriously: a failure to collect, and forward, these taxes can subject an employer to vigorous prosecution. Questions? Call the experienced payroll tax lawyers at the Oklahoma law firm of Travis W. Watkins at (800) 721-7054 for a free consultation!