Payroll Taxes – FICA FUTA
Federal Tax Course – Lesson 17

Introduction 1701
Purpose of the Tax – Tax Rates 1702
Maximum Wages Subject to the FICA Tax 1703
Who is Covered 1704
Domestic Employees 1704A
Employees vs. Independent Contractors 1705
Wages Subject to Social Security 1706
Special Rules for Tips 1707
Employer’s Identification Number 1708
Remittance of the Payroll Taxes 1709
Employer’s Quarterly Return on Form 941 1710
Purpose of the Tax – Tax Rates 1711
Who is Subject to the Federal Unemployment Tax 1712
Wages Subject to Federal Unemployment Tax 1713
Return and Payment of the Tax 1714
Withholding Statements 1715
Transmittal Form W-3 1716
Records of Wage Payments 1717
Information Returns 1718
Special Reporting Requirements for Restaurants and Beverage Establishments 1719
How Long Returns and Records Have to be Kept 1720
Special Rules for Various Types of Services and Payments 1721


Federal Payroll Taxes FICA FUTA:

In addition to the income tax withholding provisions discussed in Assignment 16, employers are subject to two Federal payroll taxes:

  1. Federal Insurance Contributions Act (FICA) taxes and
  2. Federal Unemployment Insurance (FUTA) tax.

While income tax withholding does not really represent a tax on employers or employees – it merely requires the employer to withhold part of the employee’s salary for the payment of his income tax – FICA and FUTA taxes constitute a special group of employment taxes, paid either partially (in the case of FICA tax) or completely (in the case of FUTA tax) by the employer. Although both FICA and FUTA taxes are under the Social Security program, the FICA tax is the one frequently referred to as “Social Security” tax.

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