Nov 24, 2018 Author: Accounts Junction
US Payroll Taxes is imposed along with Federal and State Income Taxes on the citizens of United States. Payroll taxes are basically divided into two parts: Social Security and Medicare Expenditure. These two kinds of Payroll Taxes are used to pay to retirees, their spouses, survivors of retired workers, disabled workers and to cover the hospital insurances. Social Security and Medicare Expenditure imposes 6.2% and 1.45% respectively on the employees and their employers based on the income earned by them annually.
Social Security tax is a bit lenient as compared to Medicare taxes when it comes to the amount of income on which the taxes are imposed. Social Security sets a certain margin of income on which the tax is being laid on. For instance, if the margin is set up to the income of $100,000. Then, a citizen earning $120,000 will be only subjected to pay tax only up to the set income margin I.e. up to only $100,000. The remaining $20,000 will be left untouched.
Moreover, the passive incomes like dividends or capital gains are also excluded. On the other hand, every penny earned by the employees and the employers is subjected to be pay under Medicare taxes. It must be noted that the medicare taxes is used to support medicare insurances and not to cover drug or treatment bills of the patients.
Accounts Junction can help you manage your payroll liabilities and account for same.
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