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The term "payroll tax" refers to a broad range of taxes that employers are required to pay and, in certain cases, withhold from employees' paychecks. The proper tax authorities receives these taxes from the employer. The two most significant payroll tax kinds are:
Taxes on Federal Income
According to IRS tables in publication 15T, withholding for federal income tax is made. You complete a W-4 form when you are employed. Your employer will be informed of how many dependents you intend to list. The employer uses this information, along with your salary, to determine how much federal income tax should be deducted from your payment by consulting IRS publication 15T.
FICA, or Federal Insurance Contributions Act, is the collective name for the Social Security and Medicare taxes that are withheld (Federal Insurance Contributions Act). Individuals were responsible for 7.65% of the nation's taxes in 2020, of which 6.20% went to Social Security and 1.45% to Medicare. The employer's share of the obligation was 7.65%. The Social Security tax does, however, have a wage base cap, and in 2022, that cap was $147,000. It will increase to $160,000 for the 2023 tax year. Therefore, in 2022, wages over $147,000 were exempt from the Social Security tax.
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