Human Resources Plan 20-30 pages

Virginia Employer Taxes (Example)

NOTES:

1. SSN Taxes are on first $128,400 of individual’s pay. No SSN tax after that.

2. The current FUTA tax rate is 6% on the first $7,000 of wages you pay to an employee. Employers receive a credit of 5.4% on IRS Form 940, reducing the FUTA rate to .6%, or $42 per employee per year (unless they make less than $7,000).

3. SUI is 2.58% on the first $8,000 each employee makes.

Can you give some examples of payroll tax computation?

Company ABC Tire is a new Virginia employer paying two employees: Joe earns $5000; Bob earns $50,000. For each employee, the employer taxes are as follows:

Social Security for Joe = $310.00. (5000 x .062)

Medicare for Joe = $72.50. (5000 x .0145)

FUTA for Joe = $40.00. (5000 x .006)

SUI for Joe = $129.00. (5000 x .0258)

Total Payroll Taxes for Joe are $551.50 on $5000 of gross pay, or 11.03%.

Social Security for Bob = $3100.00. (50,000 x .062)

Medicare for Bob = $725.00. (50,000 x .0145)

FUTA for Bob = $56.00. (7000 x .008) –only the first 7000 is subject to tax.

SUI for Bob = $206.40. (8000 x .0258) –only the first 8000 is subject to tax

Total Payroll Taxes for Bob are $4087.40 on $50,000 of gross pay, or 8.17%.

Total Payroll Taxes for ABC Tire are $4638.90 on $55,000 of gross pay, or 8.43%.