What types of payroll taxes does Gusto payroll handle?

Q: What types of payroll taxes does Gusto payroll handle?

Gusto payroll handles federal, state, and local payroll taxes, including Social Security, Medicare, unemployment insurance, and workers' compensation.

Gusto Payroll handles a wide range of payroll taxes to help businesses comply with federal, state, and local regulations. By automating the calculation, withholding, and filing of these taxes, Gusto simplifies the payroll process for employers. Below is an overview of the different types of payroll taxes that Gusto manages, ensuring full compliance and minimizing the risk of penalties.

Federal Payroll Taxes

Federal Income Tax

Gusto handles the calculation and withholding of federal income taxes from employees' paychecks based on the information provided on their W-4 forms. The platform uses current IRS guidelines to ensure accurate withholding for each employee, taking into account factors like marital status, dependents, and additional withholding requests.

Federal Insurance Contributions Act (FICA) Taxes

FICA taxes, which include Social Security and Medicare taxes, are automatically calculated and withheld by Gusto. These taxes are mandatory for both employers and employees, with each contributing a specified percentage of the employee's wages. Gusto ensures that these taxes are accurately calculated and withheld according to the latest federal requirements.

Federal Unemployment Tax Act (FUTA) Taxes

Gusto calculates and files Federal Unemployment Tax (FUTA) on behalf of employers. FUTA taxes are solely the responsibility of the employer and fund the federal unemployment compensation program. Gusto tracks employee wages and applies the appropriate FUTA rate up to the wage base limit set by the IRS.

State Payroll Taxes

State Income Taxes

Gusto handles state income tax withholding in states where it is required. The platform automatically calculates the appropriate amount based on the employee's earnings, withholding allowances, and the specific tax rates applicable in their state of employment.

State Unemployment Insurance (SUI) Taxes

Gusto manages State Unemployment Insurance (SUI) taxes, which are paid by employers to fund state unemployment benefits. The platform calculates the SUI tax rate based on the state-specific rules and ensures timely filing and payment to the respective state agencies.

State Disability Insurance (SDI) Taxes

In states that require State Disability Insurance (SDI) taxes, such as California, New Jersey, and New York, Gusto handles the calculation and withholding of these taxes from employees' paychecks. SDI taxes fund temporary disability insurance programs that provide partial wage replacement for employees who cannot work due to non-work-related illness or injury.

Local Payroll Taxes

Local Income Taxes

Gusto also supports the calculation and withholding of local income taxes in jurisdictions where they are applicable. Local income taxes are often levied by cities, counties, or school districts, and the rates can vary significantly. Gusto ensures compliance with local tax requirements by accurately withholding the appropriate amounts from employees' wages.

Other Local Taxes

Gusto handles other local payroll taxes, such as transit taxes, municipal taxes, and other locality-specific levies. The platform keeps up-to-date with local tax regulations to ensure that all applicable taxes are calculated, withheld, and remitted correctly.

Year-End Tax Filing and Reporting

W-2 and 1099 Forms

At the end of the year, Gusto generates W-2 forms for employees and 1099 forms for contractors. These forms summarize the total wages paid and taxes withheld during the year. Gusto handles the electronic filing of these forms with the IRS and ensures that copies are provided to employees and contractors via their self-service portal.

Employer Tax Filings

Gusto prepares and files all necessary employer tax forms, including Form 940 for federal unemployment taxes and various state-specific forms required for unemployment, disability, and other payroll taxes. This ensures that businesses remain compliant with all federal, state, and local tax regulations.

Compliance and Support

Automatic Updates to Tax Rates and Regulations

Gusto continuously monitors changes in federal, state, and local tax rates and regulations. The platform automatically updates its calculations to reflect these changes, reducing the risk of non-compliance and potential penalties for employers.

Tax Filing Support

Gusto provides support for any questions or issues that may arise related to payroll tax calculations and filings. Their customer service team is available to help businesses navigate complex tax situations and ensure full compliance with all applicable laws.