Figure payroll withholding taxes To figure payroll withholding taxes, just follow this guide of steps to take and links to resources. Employees’s Gross Pay Minus Required Payroll Tax deductions (including any voluntary deductions) What’s left is the net pay.     Required Payroll Tax Deductions   Since the payroll taxes have to be withheld from your employees’ paychecks, it’s important to understand the different kinds of mandatory withholdings: Federal Income Tax (based on the withholding tables based on the Fed’s Publication 15) Social Security tax withholding (6.2%, up to the annual maximum for that employee) Medicare Tax (1.45%) Any applicable state income tax Any applicable local tax withholdings (like state unemployment insurance, city, county, state disability)   Voluntary Payroll Deductions Voluntary payroll deductions are ones where the employee has previously agreed to the deduction. These include health insura ...

  Employer’s portion for payroll taxes     After paychecks are sent to employees, your work is only half done. Here’s and explanation of, and how to calculate, the employer’s portion for payroll taxes. These employer taxes are above and beyond your employees’ gross pay.   The employer’s portion for payroll taxes includes these elements: Social Security (6.2% up to the annual maximum per employee) Medicare Taxes (1.45% of wages) Federal unemployment taxes (FUTA) State unemployment taxes (SUTA)   Note: Social Security and Medicare Taxes are commonly referred to as FICA taxes (Federal Insurance Contributions Act). These are paid for by both the employers and the employees in identical contribution amounts.   In addition to covering the employer’s portion for payroll taxes, read our other article to figure payroll withholding taxes.    Modern Business Associates is an HR company that focuses on payroll and HR outsourcing.  As a Profe ...

Introduction to pay deductions covered by the Fair Labor Standards Act (FLSA) The Fair Labor Standards Act (FLSA) establishes, among other things, federal standards for minimum wages and overtime pay that employers are required to follow. Unless a specific minimum wage and overtime exemption applies, employees must be paid at least the applicable minimum wage for each hour worked and overtime for any hours in excess of 40 hours worked in the workweek. Employees who do not qualify for an exemption are commonly referred to as "nonexempt employees" and those employees who do qualify are referred to as "exempt employees." Risks The issue of improper deductions applies to all employees, both nonexempt and exempt. An improper deduction from either is a violation of the FLSA law and such violations can result in investigations by the United States Department of Labor (DOL) and/or expensive and time-consuming litigation. As an employer considering taking deductions from any employee's wages ...

Pay Deductions Quiz: Uniforms for a minimum wage employee. You hire a minimum wage employee to work as a cashier at your auto parts store. The employee signs an agreement to have $20.00 deducted from her first check to cover the cost of a uniform. You then, as agreed upon, deduct $20.00 from the employee's first check to cover the cost of the uniform. Have you violated any Fair Labor Standards Act (FLSA) requirements? Here, you have violated the FLSA's requirement that a nonexempt employee be paid the minimum wage for each hour worked. It makes no difference that the employee agreed to the deduction. Because the employee is a minimum wage employee, there was nothing that could legally be deducted from the employee's wage to cover the cost of the uniform. Any deduction puts the employee below the minimum wage level. Modern Business Associates frequently deals with payroll issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kind ...

Pay Deductions Quiz: Hourly employee drops the computer! Can you get them to pay up? Your new hourly front desk staff employee is paid $1.00 per hour in excess of the required minimum wage and works 40 hours in the workweek. The employee drops his laptop and breaks a piece off. Your existing policies require employee responsibility, so you deduct $50.00 from the employee's weekly paycheck. Have you violated any Fair Labor Standards Act (FLSA) requirements? Yes. Under the FLSA, the employer could theoretically deduct up to $40.00 to cover some of the loss because the employee has earned $40.00 in excess of the required minimum wage during the workweek. However, once the employer has deducted any earnings in excess of the minimum wage, no further deduction can be made without violating the FLSA. Modern Business Associates frequently deals with payroll issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics includi ...

Pay Deduction Quiz: Aprons for the hardworking cook. A cook earns $10.00 per hour and works 45 hours in the workweek. Therefore the cook will have wages of $400.00 in regular pay and $75.00 in overtime pay. The employer reasons that the cook earns well above minimum wage and decides to deduct $5.00 from the cook's weekly paycheck for a replacement apron and hat although the cook has not agreed in advance to the deduction. Have you violated any FLSA requirements? Probably. Note that the deductions may not cut into any pay for overtime hours. Deductions made during weeks when overtime is worked will be particularly scrutinized to ensure that the employer is not attempting to evade the overtime requirements of the FLSA. Modern Business Associates frequently deals with payroll issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics including deductions and minimum wage issues.

Pay Deductions Quiz: Uniforms for a minimum wage employee. You hire a minimum wage employee to work as a cashier at your auto parts store. The employee signs an agreement to have $20.00 deducted from her first check to cover the cost of a uniform. You then, as agreed upon, deduct $20.00 from the employee's first check to cover the cost of the uniform. Have you violated any Fair Labor Standards Act (FLSA) requirements? Here, you have violated the FLSA's requirement that a nonexempt employee be paid the minimum wage for each hour worked. It makes no difference that the employee agreed to the deduction. Because the employee is a minimum wage employee, there was nothing that could legally be deducted from the employee's wage to cover the cost of the uniform. Any deduction puts the employee below the minimum wage level. Modern Business Associates frequently deals with payroll issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds ...

Tax credits mean good news for employers!    On March 18, 2010 President Obama signed into law the Hiring Incentives to Restore Employment Act (HIRE Act).  The HIRE Act carries two significant tax incentive components for employers:  a Social Security tax forgiveness and a retention tax credit.  The first starts immediately for employers hiring qualified employees through the remainder of 2010 and the second can be earned by employers who retain qualified employees for a minimum of 52 consecutive weeks.  The following is an overview of how both incentives work.   Social Security Tax Forgiveness: Employers will receive a 6.2% Employer Social Security Tax Exemption on wages paid to “qualified employees” after March 18, 2010 and before January 1, 2011, up to the Social Security maximum of $106,800.  The maximum credit per qualified employee is $6,621.  To be a qualified employee the new employee must: ·     &# ...

Payroll deductions should include state income tax and payroll insurance deductions As a Professional Employee Organization, our clients ask us to handle their payroll responsibilities including two of the most talked about deductions: their state income tax and payroll insurance deductions. The state income tax is part of the statutory payroll tax deductions. As required by law, statutory Payroll Tax Deductions are payroll taxes that must be withheld from your employees paycheck. You must hand these withholdings over to the multitude of tax agencies on all levels of government. Local tax withholdings (city, county, or school district taxes, state disability or unemployment insurance). State income tax withholding Federal income tax withholding Social Security tax withholding Medicare tax withholding The payroll insurance deductions are part of the Voluntary Payroll Deductions Voluntary deductions pay for various benefits which the employee has chosen to parti ...

You make the call: Is this gas station employee non exempt, vs exempt? Two decisions from different federal appellate courts illustrate the potential uncertainty in classifying an employee as an exempt employee. You make the call: Is this gas station employee non exempt, vs exempt? In Thomas v. Speedway SuperAmerica, LLC1, the court pondered whether the store manager of a chain of gas station-convenience stores was properly classified as an exempt employee. The key issue in the case was whether the employee's primary duty was management. She spent approximately 60 percent of her time on non-managerial tasks such as stocking merchandise, sweeping floors, cleaning bathrooms, operating the register and clerical duties. However, she also hired, trained, disciplined, scheduled and evaluated employees. She recommended increases, most of which were approved, and terminated some employees without prior approval from her district manager. Is this gas station employee exempt? Based ...