Employees pay Social Security taxes based on their salary. As of now, the Social Security tax rate is 6.2% but it doesn’t end there. Along with the Social Security tax, the employee’s salary is subject to a 1.45% Medicare tax. These taxes are taken out of the employee’s salary as tax withholding, same as the federal income tax withholding. With that said, the employer will hold these taxes when processing payroll and the employee will get the after-tax amount on his or her paycheck.
Also, both the Social Security and Medicare tax are subject to employer match. This means the employer will match the amount paid by the employee. For example, if $100 were withheld from the employee’s paycheck as part of the Social Security tax, the employer will pay the exact amount. The same goes for the Medicare tax as well.
However, employees are subject to additional Medicare tax at the rate of 0.9% for wages that exceed $200,000. The employer match doesn’t involve the additional Medicare tax, only the employee will pay the additional tax for wages paid in excess of $200,000. When all things put together, Social Security and Medicare tax fall under FICA taxes. This is known as the Federal Insurance Contributions Act tax. The tax paid funds the Social Security benefits and Medicare.
Reporting FICA Taxes on Form 941
The main purpose of Form 941 is to report taxes withheld from employee’s paychecks. This includes income taxes, Social Security taxes, and Medicare taxes. Use Form 941 to report the taxes withheld from employee’s salaries and pay your portion.
One thing to note here is that when filing a Form 941, the mailing address you’re going to send it will be different depending on whether or not you will send it with payment. Click here to see the mailing addresses for every state with and without payment.
Form 941 Filing Deadline
Since the IRS requires employers to file Form 941 for every quarter, it must be done by the end of the quarter. So for the first quarter, file Form 941 until March 31st, for the second quarter, file Form 941 by June 30th, etc.