Accounting Instructor, Fullerton College
Paul R. St. John, CPA
2010 Payroll Taxes Recap
Federal Payroll Taxes:
Social Security (FICA)
Medicare (FICA)
Federal Income Taxes
FUI (FUTA) Unemployment (3)
California Payroll Taxes:
State Disabilty Insurance (SDI)
California Income Tax
State Unemployment (SUTA/SUI)(4)
Employment Training Tax
Note (1) The maximum gross pay in one
calendar year that the tax is applicable per
employee.
Note (2) Income taxes withheld for the
employee are based on the W-4 claimed
marital status and number of withholding
allowances. These allowances can include
spouse, dependents and other deductions
like mortgage interest.
Note (3) The total rate is actually 6.2%,
but, if your state has a federally approved
program like CA, the net rate is only .8%.
Note (4) This rate ranges from a low of
0.10% to 6.2% depending on the un-
1/2/2010
Incurred by the EmployEE
Incurred by the EmployER
(withheld from paycheck and turned over to
government by employer)
(accrued when payroll paid with a debit to
Payroll Tax Expense)
Rate
Rate
Ceiling (1) MaxTax
6.20% $106,800 $6,621.60
1.45% none
unlimited
(2)
none
unlimited
none incurred by the employee
1.10%
$93,316 $1,026.48
(2)
none
unlimited
none incurred by the employee
none incurred by the employee
Note (4) continued employment experience rate of the
employer. The Employment Development Department (EDD) sends form DE
2088 late in the year with next year's
employers SUTA rate.
Deposits & Reporting:
Federal payroll and EDD (California) tax
deposits are usually made monthly for
small businesses using the Electronic
Federal Tax Payment System (EFTPS)
and/or payment vouchers.
Form 941 is filed quarterly for FICA and
withheld federal income taxes and Form
940 is filed annually for Federal Unemployment taxes.
Ceiling (1) MaxTax
6.20% $106,800 $6,621.60
1.45% none
unlimited
not applicable
0.80%
$7,000
$56.00
none incurred by the employer
not applicable
1.00%
$7,000 (4)
0.10%
$7,000
$7.00
EDD has similar reporting and both use the
W-2 annually to summarize each employees earnings and taxes.
SELF-EMPLOYMENT TAX: This is the
combined FICA, 12.4% and medicare,
2.9% rate for independent contractors,
totaling 15.3%. This rate, however, is only
applied to the net income (gross revenues
less allowable business deductions) and
after you multiply that net income by
92.35%. The total effective rate on net
income from self-employment is therefore
only 14.13% and half of that self-employment tax is deductible against your federal
and state taxable income.