Employee vs. Employer Payroll Taxes - Colorado
In this article
Employee Taxes
- Taxes such as Social Security, Medicare, Federal withholding, and State withholding
How Employee taxes are calculated:
- SocialSecurity/OASDI is 6.2% (until one has reached the wages limit of $128,400)
- Medicare is 1.45% of all wages up to $200,000 + an additional 0.9% for wages above $200,000
- Federal Withholding (Fed W/H) is based on Tax Tables provided by the IRS
- Colorado State Withholding (State W/H) is based on Tax Tables provided by the Department of Colorado
As the employer you would be responsible for deducting the following taxes:
Social Security/OASDI = $62.00
Medicare = $14.50
Fed W/H = $97.00
State W/H = $36.00
Net pay for John = $790.50
The $209.50 employee taxes are considered " Trust Fund Taxes" meaning you are entrusted to pay them.
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Employer Taxes
- Matching Social Security, Medicare, and Federal/State Unemployment
How Employer Taxes are calculated:
- Matching SocialSecurity/OASDI is 6.2% (until one has reached the wages limit of $128,400)
- Matching Medicare is 1.45% of all wages
- Fed UI or FUTA/FUI is 0.6% of all wages up to $7,000.00 limit paid per employee per calendar year
- Colorado State UI or SUTA/SUI is a % of all wages up to an annual wage limit of $12,600.00 per employee. This percentage rate changes for employers each year. The new employer UI rate in Colorado for non-construction trades is 1.70%.
Example: You pay John Smith $1,000.00 gross wages. John has taxes withheld as detailed above and receives a net check of $790.50. A new employer in Colorado would have these additional payroll tax expenses:
ER Social Security/OASDI: $62.00
ER Medicare: $14.50
ER Fed UI: $6.00
ER State UI: $17.00
Total Employer Tax Expense: $99.50
Generally speaking, taxes are calculated on all employee earnings -- bonus payments, commission payments, earnings for on-call duty, and even tips must be taxed.There are also special rules for taxation of certain fringe benefits even when not paid to an employee in cash.
If you failed to deduct the proper taxes from an an employee’s check(s), you as the employer would be responsible for the under-withheld taxes from the employee. However, there are certain allowances for re-collecting under-withheld taxes if collection occurs in the same calendar year (see collecting under-withheld taxes from employees).
Exceptions apply all the time, of course -- just look at the IRS Circular E for starters -- but this is a generalized introduction to payroll taxes.