Payroll Taxes

Payroll taxes are taxes withheld from an employee's salary and paid directly to the government by the employer. They fund Social Security and Medicare. As freelancers are not employees, they instead pay self-employment tax, which functions similarly.

What are payroll taxes?

Payroll taxes are taxes that employers are required to withhold from their employees' paychecks and pay to the government on their behalf. These taxes are used to fund various government programs, such as Social Security and Medicare.

How are payroll taxes calculated?

Payroll taxes are calculated as a percentage of an employee's wages. The two main types of payroll taxes are Social Security and Medicare taxes. Social Security tax is currently 6.2% of an employee's wages, up to a certain amount, while Medicare tax is 1.45% of an employee's wages, with no limit on the amount of wages subject to the tax.

What is the difference between payroll taxes and income taxes?

Payroll taxes are separate from income taxes. While payroll taxes are paid by both employers and employees, income taxes are paid only by employees. Income taxes are based on an employee's total income for the year, while payroll taxes are based only on an employee's wages.

Can employers be held responsible for not paying payroll taxes?

Yes, employers can be held responsible for not paying payroll taxes. If an employer fails to withhold payroll taxes from their employees' paychecks or fails to pay the taxes to the government, they can be subject to penalties and fines. In some cases, employers can even face criminal charges for failing to pay payroll taxes.

What is Workmade?

WorkMade is an all-in-one banking and accounting app designed specifically for freelancers! WorkMade gives you access to: zero-fee business banking, automated bookkeeping, fast and easy invoicing, and quarterly tax estimations and payments.

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