Human Resources

How to calculate Employer Taxes and Contributions for an individual employee?

Hi all, this is my first question so hopefully it’s beneficial to everyone. I work for a company that switched from QuickBooks Desktop to QuickBooks Online, but the payroll information didn’t transfer over to the new system.

I now have to go check-by-check, line-by-line, and fill out all the necessary information for Taxes Witheld and Employer Taxes and Contributions. Taxes Witheld is the easy part because that shows up on the paystub, but the Employer taxes just gets lumped into one “bucket”.

How do I calculate FUTA and Workers Comp? It looks like the totals carry over to the Employer Taxes and Contributions for Medicare, SS, CA SUI, but not for Workers Comp and FUTA taxes I know this was long-winded, but hopefully it is enough information. Thank you!

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Answer

  1. 10 Answers

    For 2020, the FUTA tax rate is 6%, per the IRS. The FUTA tax applies to the first $7,000 in wages you pay an employee throughout the calendar year. This $7,000 is known as the taxable wage base per employee.

    Workers’ Compensation Insurance premiums are based on your company’s industry, the type of work performed by each employee, claims history and your company payroll. The formula for calculating your premium is based on a per $100 basis.

    As an example the formula generally looks something like this:
    Employee Classification Rate X Employer Payroll (Per $100) X Experience Mod Rate (Mod) = Your Workers’ Comp Premium

    Here’s an example. A distribution company has eight employees and a Workers’ Compensation rate of $14 per 100. That means for every $100 of taxable wages paid to the eight workers, the employer is charged $14 for Workers’ Comp Insurance. The same company also has two administrative support staff, which has a rate of $0.30. For $100 of taxable wages paid to that employee, the employer is charged $0.30 for Workers’ Comp Insurance.

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