Payroll Services

Eagle Tax > Payroll Services

Payroll taxes in U.S.

Eagle Tax through CCH (Tax Software Leader in U.S.), is able to provide a full payroll to meet the needs of your business, it can be just one employee or dozens of employees.

Payroll plays a major role in a company for several reasons.

In a company, payroll is the sum of all financial records of salaries for an employee, wages, bonuses, and deductions. In accounting, payroll refers to the amount paid to employees for services they provided during a certain period of time. Payroll plays a major role in a company for several reasons.

From an accounting prospective, payroll is crucial because, payroll and payroll taxes considerably affect the net income of most companies and they are subject to laws and regulations (e.g. in the US, payroll is subject to federal and state regulations). From an ethics in business viewpoint payroll is a critical department as employees are responsive to payroll errors and irregularities: good employee morale requires payroll to be paid timely and accurately. The primary mission of the payroll department is to ensure that all employees are paid accurately and timely with the correct withholdings and deductions, and to ensure the withholdings and deductions are remitted in a timely manner. This includes salary payments, tax withholdings, and deductions from a paycheck.

Knowledgeable Staff

As a longtime customer, I have always felt confident in the Eagle Tax Payroll services. After meeting with the EA and the staff, their ability to listen and address our needs, as well as their knowledge of HR was all we needed to move forward!

Christian K.

Payroll taxes in U.S.

Before considering the payroll taxes we need to talk about the basic formula for the Net Pay.
From gross pay (the salary paid to the employee) one or more deductions are subtracted, to arrive at Net Pay. Thus the employee’s gross pay ( pay rate times the number of hours worked, including any overtime) minus payroll tax deductions, minus voluntary payroll deductions, is equal to Net Pay. Payroll tax deductions play a critical role and because they are provided by law they are known as statutory payroll tax deductions.

The employer must withhold payroll taxes from an employee’s check and hand them over to several tax agencies by law. Payroll taxes include the following:

Federal Income Tax withholding.

Based on withholding tables in “Publication 15, Employer’s Tax Guide” by Internal Revenue Service – IRS;

Social Security Tax withholding

The employee pays 6.2 percent of the salary or wage, up to $118,500 (as of 2016). The employer also pays 6.2 percent in Social Security Taxes. If you are self-employed, you pay the combined employee and employer amount of 12.4 percent in Social Security taxes on your net earnings;

Medicare Tax

The employee pays 1.45 percent in Medicare taxes on the entire salary or wage. The employer also pays 1.45 percent in Medicare taxes. If you are self-employed, you pay the combined employee and employer amount of 2.9 percent in Medicare taxes on your net earnings;

State income tax withholding

Various local tax withholding

Such as city taxes, county taxes, school taxes, state disability, and unemployment insurance.