Identifying Taxes
Payroll taxes can be categorized in several different ways.
Federal vs. State Taxes
Common terminology that might be used is below:
Federal taxes are any taxes that are deposited with the IRS.
- Federal Income Tax (FIT or FWT)
- Social Security Tax (SS, or OASDI)
- Medicare Tax (Med or HI)
- Federal Unemployment Tax (FUTA, or FUI)
State Taxes are any taxes that are deposited with any one of several state agencies. Employers may have employees in more than one state, so there can be quite a few entries that fall under state taxes. Keep in mind that each state has its own rules regarding what taxes are withheld, when the deposit is due, and on what form the tax information is filed. Not all of the taxes below apply to every state.
- State Income Tax (SIT or PIT)
- State Unemployment Tax (SUTA or SUI)
- Employment Training Tax (ETT)
- State Disability Insurance (SDI)
- Local Tax
- City/County Head Tax
Employee vs. Employer Taxes
Employers often look at taxes in terms of whether they are paid by the employee, or paid by the employer. Frequently, they will refer to employer taxes as their “Payroll Expense.”
Employee taxes are any taxes that are withheld from the employee’s paycheck.
- Federal Income Tax Withheld
- Social Security Tax Withheld
- Medicare Tax Withheld
- State Income Tax (if applicable)
- State Disability Insurance (if applicable)
- State Unemployment Insurance (if applicable)
- Local Taxes (if applicable)
Employer taxes are taxes that the employer pays based on gross wages paid to their employees.
- Social Security Tax
- Medicare Tax
- Federal Unemployment Insurance
- State Unemployment Insurance
- Local Taxes (if applicable)