1. What is S Corp Payroll Tax?

S Corporation payroll taxes include FICA (Social Security and Medicare), FUTA (Federal Unemployment Tax), and state unemployment taxes. These are calculated as a percentage of employee salaries and are the employer's responsibility.

2. How Does the Calculator Work?

The calculator uses the payroll tax formula:

Where:

• \( \text{Salary} \) — Employee salary in USD
• \( \text{FICA Rate} \) — Social Security and Medicare rate (typically 15.3%)
• \( \text{FUTA Rate} \) — Federal unemployment tax rate (typically 6%)
• \( \text{State Rates} \) — State unemployment insurance rate (varies by state)

Explanation: The equation calculates the total payroll tax burden by multiplying the salary by the sum of all applicable tax rates.

3. Importance of Payroll Tax Calculation

Details: Accurate payroll tax calculation is crucial for S Corps to remain compliant with tax laws, budget properly, and avoid penalties for underpayment.

4. Using the Calculator

Tips: Enter salary in USD, tax rates as decimals (e.g., 6% = 0.06). Default values are provided for FICA (0.153) and FUTA (0.06) rates.

5. Frequently Asked Questions (FAQ)

Q1: What's included in FICA rate?
A: FICA includes 12.4% for Social Security (on wages up to the wage base) and 2.9% for Medicare (no wage limit).

Q2: Are S Corp owners subject to these taxes?
A: Only on reasonable salary amounts, not on distributions. Salary must reflect fair market value for services.

Q3: How often are payroll taxes due?
A: Typically quarterly, though large employers may need to deposit taxes more frequently.

Q4: What's the typical state unemployment rate?
A: Varies by state and employer experience rating, typically between 1-5%.

Q5: Are there any tax credits available?
A: Some states offer tax credits for new hires or during special programs. Check with your state's labor department.