There are two unemployment taxes: Federal Unemployment Tax (FUTA) and State Unemployment Tax (SUTA).
The rate for FUTA is 6% on the first $7,000.00 of wages for each employee. This can be offset by as much as 5.4% for having paid SUTA to the appropriate State on a timely basis, leaving a net amount due of 0.6% of the first $7,000.00 of wages or $42.00 per employee. If you don’t pay the State unemployment the tax is $420.00 per employee.
Your Federal Unemployment Tax Rate is fixed. It changes infrequently. Learn more here.
Your State unemployment rate is sent to you each year by every State in which you have a reported employee. If you use a payroll provider (like GetPayroll!) be sure to send them your new rate each year to avoid penalty and fees for underpayment. If you are a GetPayroll client, we will email you twice at year-end as reminders to send us your new rate.
Each State also has a default rate for new employers and should let you know what that is when you register and get your State Unemployment Tax ID.
All cash and non-cash tips an employee receives are income and are subject to Federal income taxes. All cash tips received by an employee in any calendar month are subject to social security and Medicare taxes and must be reported to the employer, unless the tips received by the employee during a single calendar month while working for the employer total less than $20. Cash tips include tips received from customers, charged tips (e.g., credit and debit card charges) distributed to the employee by his or her employer, and tips received from other employees under any tip-sharing arrangement.
Employees who receive tips must do three things:
- Keep a daily tip record.
- Report tips to the employer, unless less than $20.
- Report all tips on an individual income tax return.
When Employees Should Report Tips to The Employer
Employees must report tips to the employer by the 10th of the month after the month the tips are received. For example, tips received by an employee in August 2014 are required to be reported by the employee to the employer on or before September 10, 2014. If the 10th falls on a Saturday, Sunday, or legal holiday, an employee may give the report to the employer by the next day that is not a Saturday, Sunday, or legal holiday. An employer may require employees to report tips more than once a month. However, the statement cannot cover a period of more than 1 calendar month.
An employer’s or employee’s characterization of a payment as a “tip” is not the last word. Distributed service charges (often referred to as “auto-gratuities” by service industries) should be recorded as non-tip wages. Revenue Ruling 2012-18 lists the factors to determine whether such payments are tips or service charges.
The employer has several responsibilities regarding tips including recordkeeping, reporting, collecting taxes on tips, filling and filing forms as well as depositing taxes.
Employers must -retain employee created tip reports, withhold federal income tax and the employee share of FICA and Medicare taxes based on wages paid and tips reported to the employer. The employer reports this information and deposits taxes along with all other employment tax obligations the employer has. Employers must calculate and pay the employer portion of FICA and Medicare taxes as well. This is calculated on the total wages paid and the tips reported to the employer by tipped employees.
Tips reported to the employer by the employee are to be included in Box 1 (Wages, tips, other compensation), Box 5 (Medicare wages and tips), and Box 7 (Social security tips) of the employee’s Form W-2. Enter the amount of any uncollected social security tax and Medicare tax in Box 12 of Form W-2. For more information, see the General Instructions for Forms W-2 and W-3.
Employers report FIT, FICA and Medicare taxes withheld from employees’ wages and the employer calculated portion of FICA and Medicare taxes on Form 941, Employer’s Quarterly Federal Tax Return. The taxes are deposited according to current federal tax deposit requirement for the employer.
Employers are also required to file Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, and depositing the calculated taxes as well. The employee pays no FUTA tax, it is levied only on the employer. More in a later chapter on FIT, FICA, Medicare and FUTA taxes.
Every involuntary garnishment will come with a court order. That order should have full and complete instructions on who the order applies to, how much to garnish from their wages, where to send the money, when to begin the garnishment, and possibly when to stop the the garnishment (but not normally). You have to know the rules on maximum garnishments and whether the employee has multiple garnishments and how to prioritize them.
- In the Dashboard, click AGENDA. This will open the integrated calendar.
- Click the plus (+) icon and add your reminder(s) as needed. These reminders will display in the AGENDA section of your Dashboard and will also display a pop-up as your deadline approaches.
There are a number of exemptions from overtime rules. These include being a 20% owner or better and working in the business. Other exemptions which you can get details from us or the US Department of Labor include:
- Executive Exemption
- Administrative Exemption
- Learned Professional Exemption
- Creative Professional Exemption
- Practice of Law or Medicine
- Highly Compensated Employees
- Computer Employee Exemption
- Outside Sales Exemption
When employees do not report some of their tips to their employer, the employer is not liable for the employer share of social security and Medicare taxes on the unreported tips until notice and demand for the taxes is made to the employer by the IRS. The employer is not liable to withhold and pay the employee share of social security and Medicare taxes on the unreported tips.
For more information on the Section 3121(q) Notice and Demand, see Revenue Ruling 2012-18, which sets forth guidance on social security and Medicare taxes on tips.
A payroll deduction is a reduction in the employee’s net pay. It is It typically includes income tax, national insurance or social security contributions, and may also include group insurance or pension fund contributions, union or association dues, authorized wage assignments, etc
A payroll job is one where the worker is an employee of the company for which they work. Taxes are withheld and paid into the government. The company pays taxes as well on the worker both as contributions to Medicare, social security and unemployment taxes to paid the worker if they are fired without cause. The worker is also eligible for company benefits if offered by the company. In some States or localities, there may be mandated benefits available in addition to the Federally mandated benefits for employees including overtime and unemployment benefits.
Off-payroll jobs mean you are not an employee. In all likelihood, the worker is an independent contractor. The worker is responsible for all of his taxes. No company benefits and no mandated benefits or protections that are available to employees. However, there are some tax advantages available to an independent contractor such as deducting commuting expenses and all business related expenses. Those deductions are not available to an employee.
Wage theft in some industries and some areas is rampant. There are cheats everywhere. If your employer is deliberately cheating you of wages then you need to immediately contact your state employment commission. In Texas is is the TWC (Texas Workforce Commission). They have a payday law division that will sue your employer (or former employer), at no cost to you, for all wages due you. Every state has something similar. You can also contact the US Department of Labor, particularly if it is an FLSA (Fair Labor Standards Act) violation that falls outside of state laws.
If they are just late in paying you the state will help but probably not faster than the company can catch up.
If you have not talk to HR or your boss that is the first step to take. ASAP. Then put it in writing to them as well sending your employer a copy Certified Mail.
The advice about an attorney is probably not useful unless you have a substantial claim for many years. Attorneys are expensive and will normally want a retainer up front. The government provides legal representation if they take the case for free and can institute criminal sanctions which a private attorney cannot.
HR is not technically a part of payroll. Payroll is the calculation of an employee’s pay. Issuing payment. filing government reports and paying taxes. Human resources (HR) is the company department charged with finding, screening, recruiting and training job applicants, and administering employee-benefit programs. A portion of the HR function impacts an employee’s payroll, but much does not. HR and payroll may fall under the same department in some companies and different departments in other companies. Sometimes payroll is viewed as an accounting function under the controller while HR is under a VP of HR and only at the CEO level do the separate chains of command meet.
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