Payroll tax calculator
Hiring a new employee is exciting. But once you do, how much is it going to cost you? We’ll give you a quick estimate of the actual true cost of hiring an employee, and keep you ready for year-end. Enter your information below to get your estimate.
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What is payroll tax?
Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. These taxes are imposed on employers and employees and on various compensation bases, and are collected and paid to the taxing jurisdiction by the employers.
Helpful tips
Keep your records and documents in one place so you’re prepared for tax time. Here are a few other helpful tips:
- Employee contracts aren’t a legal requirement, but they protect your employees and your business. Contracts can outline everything from job descriptions and expected hours of work to the date of employment and salary details. A lawyer can help you draft a contract if you have any questions as to what should be included.
- Whether you hire full-time employees, contractors or freelancers makes a big difference when it comes to payroll. Make sure you’re compensating them properly and according to the tax guidelines where your business operates.
- Wave’s small business payroll software comes with worry-free features such as automatic tax remittances, direct deposits into your employees’ bank accounts and automatic payroll journal entries.
- Got questions about payroll and taxes? Check out The Ultimate Year-end Payroll Checklist
- Check out our other free payroll tools that can help you manage your business.
How to use the Payroll Tax Calculator
To calculate the payroll tax you'll need to apply to your employee's wages, follow these simple instructions and you'll have a quick estimate of the true cost of each employee on your payroll.
- Enter the state in which your business operates and has employees.
- Enter the hourly wage of your employee.
- Enter the SUI (State Unemployment Insurance) Rate for your business's state.
- Click "Calculate Payroll."
- Review the "My Results" section to obtain the social security, Federal Unemployment, Employer Medicare and State Unemployment taxes that you'll need to pay for this employee.
Essential Payroll Tax Forms
After calculating your payroll taxes, it's important to understand the paperwork you'll need to prepare for when tax season rolls around. The IRS requires every employer to file specific forms related to each of their employees, some of which need to be submitted annually while others must be filed upon hiring. Below are the IRS payroll forms that every employer should know about, click the links to read more about each one:
- IRS Form W-2: W-2 forms keep track of employee's wages, salaries, commissions, and tips received throughout the year.
- IRS Form W-3: W-3 forms accompany W-2s. If you file one or more W-2 form, you'll also need to file a W-3 with the IRS.
- IRS Form W-4: A W-4 Form must be collected from each new hire you make, and is used to report new hires to the IRS.
- IRS Form W-9: A W-9 Form must be collected from any independent contractors who work for your business, and is used to report that working relationship to the IRS.
- IRS Form I-9: An I-9 Form is used to verify and authorize an employee's eligibility to work in the U.S.
- IRS Form 940: The 940 Form is filed annually with the IRS, and is used to report your Federal Unemployment Taxes.
- IRS Form 941: The 941 Form is filed quarterly and is used to report how much income and FICA tax you've withheld, as well as how much FICA tax you owe as an employer.
- IRS Form 944: The IRS 944 Form is similar to Form 941, but it's filed annually to report the total income and FICA taxes that your business owes for the entire year.
- IRS 1095 Forms: 1095 Forms are a set of documents introduced by the Affordable Care Act of 2014, and they're used to report on your employees health care coverage and associated taxes.
- IRS 1099 Forms: 1099 Forms are used to report on any income that your business paid or received outside of a traditional employment context. For example, if you've paid independent contractors or freelancers then you'll have to file one of the many 1099 variations.
After calculating your payroll taxes, it's important to understand the paperwork you'll need to prepare for when tax season rolls around. The IRS requires every employer to file specific forms related to each of their employees, some of which need to be submitted annually while others must be filed upon hiring. Below are the IRS payroll forms that every employer should know about, click the links to read more about each one:
- IRS Form W-2: W-2 forms keep track of employee's wages, salaries, commissions, and tips received throughout the year.
- IRS Form W-3: W-3 forms accompany W-2s. If you file one or more W-2 form, you'll also need to file a W-3 with the IRS.
- IRS Form W-4: A W-4 Form must be collected from each new hire you make, and is used to report new hires to the IRS.
- IRS Form W-9: A W-9 Form must be collected from any independent contractors who work for your business, and is used to report that working relationship to the IRS.
- IRS Form I-9: An I-9 Form is used to verify and authorize an employee's eligibility to work in the U.S.
- IRS Form 940: The 940 Form is filed annually with the IRS, and is used to report your Federal Unemployment Taxes.
- IRS Form 941: The 941 Form is filed quarterly and is used to report how much income and FICA tax you've withheld, as well as how much FICA tax you owe as an employer.
- IRS Form 944: The IRS 944 Form is similar to Form 941, but it's filed annually to report the total income and FICA taxes that your business owes for the entire year.
- IRS 1095 Forms: 1095 Forms are a set of documents introduced by the Affordable Care Act of 2014, and they're used to report on your employees health care coverage and associated taxes.
- IRS 1099 Forms: 1099 Forms are used to report on any income that your business paid or received outside of a traditional employment context. For example, if you've paid independent contractors or freelancers then you'll have to file one of the many 1099 variations.
Benefits of using a Payroll Tax Calculator
- Fast & Efficient
Save time with our quick and easy-to-use payroll tax calculator that calculators your payroll tax in a matter of seconds.
- Accurate & Error-Free
Our online payroll tax calculator helps reduce the chances of human errors when running your payroll by automating the calculation of your payroll taxes.
- Cost Effective
The best part of our online payroll tax calculator is that it's free. There's no cost required to calculate your payroll taxes, nor is there any cost involved in editing the totals you've calculated.
Helpful tips
Keep your records and documents in one place so you’re prepared for tax time. Here are a few other helpful tips:
- Employee contracts aren’t a legal requirement, but they protect your employees and your business. Contracts can outline everything from job descriptions and expected hours of work to the date of employment and salary details. A lawyer can help you draft a contract if you have any questions as to what should be included.
- Whether you hire full-time employees, contractors or freelancers makes a big difference when it comes to payroll. Make sure you’re compensating them properly and according to the tax guidelines where your business operates.
- Wave’s small business payroll software comes with worry-free features such as automatic tax remittances, direct deposits into your employees’ bank accounts and automatic payroll journal entries.
- Got questions about payroll and taxes? Check out The Ultimate Year-end Payroll Checklist
- Check out our other free payroll tools that can help you manage your business.
Our payroll software makes it easy to pay yourselves, your employees and contractors accurately and on-time