What are ER wage taxes, and what does "ER" stand for?

ER wage taxes, or "Employer’s share of Social Security and Medicare taxes," are the portion of payroll taxes paid by the employer. "ER" stands for "Employer's responsibility."

How are ER wage taxes calculated in the United States?

ER wage taxes are calculated based on the wages earned by the employee. The current Social Security tax rate for employers is 6.2% of wages up to the Social Security wage base, while the Medicare tax rate is 1.45% of all wages, with no annual limit.

What forms and reports are required for ER wage taxes?

Employers are typically required to file Form W-2, which reports the total wages paid to employees and the amount of taxes withheld. Employers must also file Form 941, reporting federal income and payroll taxes, including the employer's share of Social Security and Medicare taxes, on a quarterly basis.

What is the penalty for failing to pay ER wage taxes?

Employers who fail to deposit payroll taxes may face penalties ranging from 2% to 15% of the unpaid taxes, depending on the duration of the delinquency.

Is the federal unemployment tax considered a wage tax?

No, the Federal Unemployment Tax (FUTA) is a separate federal payroll tax paid by employers on their employees' wages. It funds the Federal Unemployment Trust Fund, which provides unemployment benefits to eligible workers. Unlike Social Security and Medicare taxes, FUTA tax is solely the responsibility of the employer and is not deducted from employee wages.