As an employer, you are required to pay certain employer only payroll taxes. Social Security/FICA, although lowered to 4.2% for the employee portion, remains at 6.2% for the employers match up to the first $110,100 in wages for 2012. Also required is a 1.45% Medicare match with no salary cap. FUTA must be calculated at a rate of 0.6% for the first $7,000 in wages. However, keep in mind, if your state falls in a credit reduction state for the year, you will owe an additional 0.3% in FUTA taxes. When the list of credit reduction states is released at year end, we will notify you if your company is required to pay additional FUTA taxes. State unemployment tax will vary depending on your state and currently assigned rate.
Example: Your company just hired John Smith. You are located in North Carolina, and your 2012 State Unemployment rate is 2.04%. You have agreed upon an annual salary of $60,000 for John. Your annual payroll cost would be as follows:
Base Salary: $60,000
Social Security/FICA: $3,720
State Unemployment: $416.16
Total Payroll Cost: $65,048.16
John did not reach the $110,100 wage base limit for Social Security/FICA. Therefore his entire wages were subject. Assuming North Carolina will not be a credit reduction state in 2012, the FUTA will be $42.00 based on the wage base of $7,000. John’s salary exceeds the North Carolina 2012 wage base of $20,400 and therefore your liability would be 2.04%($20,400) = $416.16.
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