Federal Withholding Tax (FWH)

•  FWH is an estimate of an employee's yearly income tax

•  uses tables based on “allowances”, filing status, and yearly income

•  whole dollars only, typically withholds more than necessary

•  when the employee files tax return, the excess is refunded

Social Security (SS)

•  Employee Portion Withheld = Federal Gross Wages X 6.2% (.062)

•  Employer Portion = Federal Gross Wages X 6.2% (.062)

•  Wage Limit per employee is $90,000 (per year for 2005)

Medicare (Med)

•  Employee Portion Withheld = Federal Gross Wages X 1.45% (.0145)

•  Employer Portion = Federal Gross Wages X 1.45% (.0145)

•  No wage limit on Medicare tax

Payment options for FWH, SS, Med:

•  usually pay monthly with Deposit Coupon at your local bank

•  you can pay your Federal payroll taxes electonically with our Payroll E-services

•  if you accumulate less than $2,500 of liabilities per quarter you can pay in full with a timely filed 941 return ($500 was former threshold) (watch other limits!)

State Unemployment (SUTA)

•  Federal Gross Wages X State Unemployment Rate

•  Only pay on the 1st $8,000 of wages for each employee

•  Pay on time and receive credit against the Federal Unemployment Tax (FUTA)

•  Pay Quarterly along with state employment return

Federal Unemployment Tax (FUTA)

•  Federal Gross Wages X .8% (.008)

•  Only pay on the 1st $7,000 of wages for each employee

•  .8% rate assumes State unemployment is paid on time

•  Use Form 940 or 940-EZ annually to report amount due

•  Pay liability at Bank using Form 8109 whenever it exceeds $100 or

•  Pay Federal Unemployment Tax electronically using our Payroll E-Services