There are primarily three types of wages, hourly, salary, and commission. An hourly wage is when a company pays you by the hours you work. A salary is an annual amount paid by the month or by the week. Being paid by commission is used in a sales oriented position and it means that your pay depends on how much merchandise you sell, and how much money you bring into the company.
Mandatory deductions include:
1. Medical Aid- State tax for industrial isurance benefits program.
2. Federal Income Tax- Determined amount of withholding from employee signed federal W-4 form.
3. Medicare insurance- This tax supports federal health insurance.
1. Medical Aid- State tax for industrial isurance benefits program.
2. Federal Income Tax- Determined amount of withholding from employee signed federal W-4 form.
3. Medicare insurance- This tax supports federal health insurance.
Employers have numerous payroll tax withholding and payment obligations. Of the importance is the proper payment of what are commonly known as FICA taxes. FICA taxes are required withholding from an employee's wages as well as an employer's portion of the taxes that must be paid.
The Federal Insurance Contributions Act (FICA) is the federal law that requires you to withhold three separate taxes from the wagesyou pay your employee. FICA is comprised of:
The Federal Insurance Contributions Act (FICA) is the federal law that requires you to withhold three separate taxes from the wagesyou pay your employee. FICA is comprised of:
- a 6.2 percent Social Security tax;
- a 1.45 percent Medicare tax (the “regular” Medicare tax); and
- beginning in 2013, a 0.9 percent Medicare surtax when the employee earns over $200,000.