Employers have several responsibilities regarding payroll taxes and withholding. They must withhold the correct amount of federal income tax, Social Security tax, and Medicare tax from employees’ paychecks based on their Form W-4 and the IRS tax withholding tables. Employers are also responsible for paying their share of Social Security and Medicare taxes, as well as federal and state unemployment taxes. Employers must deposit these withheld and employer-paid taxes with the IRS and state agencies according to specific deposit schedules. They must also file quarterly and annual payroll tax returns, such as Form 941 and Form W-2, and maintain accurate payroll records. Failure to comply can result in penalties and interest charges from the IRS and state agencies.
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