(1) |
Federal and State Payroll Taxes On the federal level, employers are required to withhold and pay federal income tax, social security tax, and Medicare tax from their employee's paychecks to the federal tax authorities. The employer is also responsible for paying the appropriate amount of Social Security and Medicare taxes to the Internal Revenue Service on behalf of the employee. On the California state level, employers are required to report all employee wages to the EDD (Employment Development Department) each calendar quarter. With the exception of some employers of household workers, all other employers are required to make regular State Disability Insurance (SDI) and California Personal Income Tax (PIT) withholding contributions for their employees. The frequency of the employer deposit schedule depends on the employer's federal deposit schedule and the amount of PIT withheld. At the same time, new employers in California pay a 3.4% unemployment insurance (UI) tax and 0.1% employment training tax (ETT) on the first $7,000 of each employee's wages (also the first $7,000 of wages). Although the new employer's UI tax rate does not change for the first three tax years, if the new employer has a negative reserve account balance, the new employer's ETT rate after the first year maybe 0% (zero). For information on how to determine the UI rate, see DE231Z, Information Sheet: California Experience Rating System. The SDI rate may change each year. Registration forms can be downloaded from EDD's website. |
(2) |
Relevant tax rates If the employer issued required information returns, the section 3509 rates are the following:
If the employer didn't issue required information returns, the section 3509 rates are the following:
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Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage. |