WEEKLY  TAX TIP: September 8, 2008

What do those payroll tax acronyms mean? If you've ever wondered about the meaning of acronyms you see on those quarterly payroll tax forms your business is required to file, here's a brief guide to decode the jargon. FICA. The Federal Insurance Contributions Act authorizes collections of social security payroll taxes. At present, the FICA rate is 7.65% of certain wages, and consists of two parts: 6.2% old age, survivor, and disability insurance (commonly called social security); and 1.45% Medicare hospital insurance. As an employer, you're generally required to withhold FICA taxes from employees' wages, and to also pay a matching amount. Note: If you employ workers in your home, such as nannies, different rules apply. SUTA. Individual states collect taxes to fund unemployment insurance programs under State Unemployment Tax Acts. State unemployment tax is not withheld from the wages your employees earn. FUTA. Under the Federal Unemployment Tax Act, the IRS collects 6.2% of the first $7,000 of wages you pay your employees each year. This tax is not withheld from your employees' wages. As a general rule, when you make state unemployment tax (SUTA) payments on time, you can claim a credit against your FUTA tax liability. The credit is 5.4%, and reduces the FUTA rate to .8%, or $56 per employee per year. If you have questions about these or other payroll issues, please call. We're here to help. previous weeks' tax tips The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. © copyright