As an employer, part of your job is to withhold, deposit and report payroll taxes. Payroll taxes are required at a Federal and State level and it’s important that you’re aware of your responsibilities as an employer to avoid fines and penalties. Here are the most common payroll taxes and responsibilities for small business owners in Washington state.
Required Payroll Deductions for Employees
Here are the tax rates that must be withheld from an employee’s paycheck:
Federal income tax — Based on annual income
Social Security tax — 6.2%
Medicare tax — 1.45%
Workers’ compensation insurance — Variable*
Paid Family and Medical Leave — 0.8%*
* Some exceptions may apply
Additional Medicare tax (0.9%) may apply if an employee:
Files as single and their income exceeds $200,000.
Files as head of household (with qualifying person) and their income exceeds $200,000.
Files as a qualifying widow(er) with a dependent and their income exceeds $200,000.
Files as married filing separately and their income exceeds $125,000.
Files as married filing jointly and their combined income exceeds $250,000.
Voluntary Payroll Deductions for Employees
If offered, employees may choose to participate in employer sponsored plans and withhold deductions. These plans may include:
Premiums on health and life insurance
Retirement plan contributions
Employee stock purchase plans
Job-related expenses such as meals and uniforms.
Required Payroll Taxes for Employers
Your business is responsible for paying a share of payroll taxes. This includes:
*Some exceptions may apply
Employer Responsibilities
Annually
Report annual Federal unemployment tax (FUTA) using Form 940.
Provide employees with a W-4 to determine how much to withhold.
File and provide employees with a Wage and Tax Statement (W-2) that details their withheld Federal income tax, Social Security, and Medicare tax.
Quarterly
Report your employees' withheld income tax, Social Security tax, and Medicare tax and pay your portion of Social Security and Medicare tax using Form 941.
Pay a premium on Paid Family and Medical Leave program and report hours and wages to the Employment Security Department.
Report SUI to the Employment Security Department using a tax-and-wage report.
File an L&I Quarterly Report.
Varies
Deposit Federal payroll taxes withheld from paychecks using the Electronic Federal Tax Payment System (EFTPS).
Stay on Top of Your Payroll
All businesses are different and requirements may differ from what’s listed. If you’re unsure about your tax obligations as an employer, talk to your CPA or bookkeeper.
If you’re looking for help managing your payroll, our experienced bookkeepers can help take off some of the pressure of keeping up with complicated taxes so you can focus on growing your business.
Contact us or give us a call at (360) 756-5020 to see how we can help!