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Subject: Tax Highlights/Updates in Payroll Withholding Schedules/Rates "2010"
Federal Withholding Tax You may withhold federal income tax by using either the wage-bracket tables or the percentage method tables. These official methods and applicable withholding schedules are published by the Internal Revenue Service in the revised 03/09 Circular E, Employer's Tax Guide, Publication 15.
Social Security (FICA Tax) - OASDI and Medicare
The combined Social Security and Medicare tax rate for 2010 is 7.65% -- 6.2% for social security (OASDI) and 1.45% for hospital insurance (Medicare). For 2010, the OASDI wage base REMAINS at $106,800. The Medicare wage base remains limitless. Employers must match/contribute the amount of FICA tax deducted from each employee's wages.
The 2010 tax on self-employment income of $400 or more is 15.3%. The OASDI wage base is $106,800. The Medicare wage base on self-employed income also remains limitless.
Federal Unemployment Insurance Tax (FUTA)
The gross FUTA tax rate for 2010 remains 6.2% on the first $7,000 of nonexempt wages paid to an employee. Since employers get a 5.4% credit for state unemployment taxes paid, the net federal unemployment tax payable is 0.8%, or $56 per employee annually.
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Executive Payroll Services
