Ameripride Tax Group Presents Eight Things Doctors Should

Know About Payroll Taxes

According for the IRS, employers are required to report and remit payroll taxes for every single worker.
While filing payroll taxes may possibly be a seemingly straightforward task, physicians along with other
modest company owners should have a standard understanding of these eight principles to be able to
stay away from costly errors.

1. The Basic Formula for Calculating Net Shell out

Calculating the net shell out can be a somewhat uncomplicated calculation that may be made up of
several critical figures. The calculation looks like this:

The employee's gross pay (pay back rate times hours worked)
Minus Voluntary deductions
Minus Statutory tax deductions

RESULT: net spend

No matter whether payroll occurs weekly, bi-weekly, monthly, etc., the very same calculation is used.
Although this may well look uncomplicated, the reality is, as with practically everything in accounting,
the devil is in the details. The individual responsible for computing payroll should check and re-check
calculations to ensure that the payroll is error-free.

2. Voluntary Payroll Deductions

Voluntary payroll deductions are exactly what they sound like: deductions chosen voluntarily by the
personnel. The employee must request the deductions in order for an employer to withhold the cash.
This sort of deduction may be employed to pay back for a assortment of advantages, which includes:

* Retirement plan contributions (including a 401k program)

* Worker stock purchase plans (ESPP and ESOP plans)

* Health insurance premiums (medical, dental, and vision)

* Life insurance premiums

* Union dues

* Uniforms

* Meals

* Other job-related expenses

Voluntary deductions really should be tracked carefully and applied for the proper account. Depending
on the form of benefit, they may be compensated with pre- or after-tax dollars.- Ameripride Tax Group

3. Statutory Payroll Tax Deductions

Statutory deductions are those withholdings that are expected by law. Payroll taxes are statutory
deductions. Physicians along with other tiny enterprise proprietors, in reality each employer, accept a
fiduciary responsibility to take these withholdings from the employee’s paycheck and remit them on the
right tax agencies. Payroll tax deductions may perhaps incorporate:

* Federal income tax withholding (based on withholding tables in Publication 15)

* Social Security tax withholding (six.2% up towards the annual maximum)

* Medicare tax withholding (one.45%)

* State revenue tax withholding

* Various local tax withholdings (such as city, county, or school district taxes, state disability or
unemployment insurance)!!

4. Payroll Tax Responsibilities for Medical professionals

In addition to collecting voluntary and statutory withholdings, employers also have the following
responsibilities:

* Allocating and depositing the company portion from the payroll taxes

* Depositing tax dollars withheld

* Preparing reports for state and Federal authorities

* Filing payroll tax returns

* Accounting for voluntary withholdings and ensuring that those monies are sent on the proper account

* Preparing annual W-2 forms

5. The Employer Portion of Payroll Taxes

Employers spend a portion in the total payroll tax for each employee. These taxes are an additional
quantity paid to the government and might be employed to compute the fully-burdened price of an
personnel. The employer-portion of payroll taxes incorporates:

* Federal unemployment taxes (FUTA)

* State unemployment taxes (SUTA)

* Social Protection taxes (6.2% up towards the annual maximum)

* Medicare taxes (one.45% of wages)

6. FICA Taxes

FICA (Federal Insurance coverage Contributions Act) is really a payroll tax that may be comprised of
Social Security and Medicare taxes. These taxes are paid both by the workplace and the employees.
Combined, the FICA taxes equates to 15.3%, which contains:

* Social Safety (Worker: 6.2%)

* Social Safety (Company: six.2%)

* Medicare (Worker: 1.45%)

* Medicare (Workplace: 1.45%)

7. Reporting Payroll Taxes

Physicians have the same responsibility as any other enterprise proprietor when it comes to reporting
their tax obligation in a timely manner. They should also take care to deposit payroll taxes when they're
due. Reporting requirements incorporate:
* Annual federal unemployment tax return (Type 940 or 940EZ)

* Employer's quarterly payroll tax return (Type 941)

* Annual Return of Withheld Federal Earnings Tax (Form 945)

* Federal tax deposits

* Wage and Tax Statements (Type W-2)

8. Timeliness is Vital

Business proprietors can compensate federal payroll taxes by mail or on the net. No matter which
technique is chosen, it is vital to know when payments and reports are due and to submit them on time.

As the company proprietor, the doctor or a trusted tax professional ought to contemplate their choice of
a payroll accountant meticulously. Moreover, an annual audit of payroll documents really should be
completed to assure that any mistakes are caught before they turn out to be a bigger problem. Mainly
because employers act as an intermediary in collecting and sending taxes towards the government, the
IRS takes payroll taxes incredibly seriously. In fact, it can be 1 with the few types of debt (tax other
otherwise) that cannot be cleared away by a bankruptcy judgment.

Ameripride Tax Group