 In this presentation, we will take a look at taxes for the employer and employee. We're going to look at taxes and deductions and determine whether or not it's the employer tax or employee tax and deduction. In other words, we're looking at who is responsible for paying these items. Is it the employer or the employee? Now this is a confusing question because in one sense you might argue that they're all employer responsible taxes because the employer is really the one that's facilitating the payment, making the actual logistics of the payment happen. However, the question is really whether or not it's being taken out of the employee's gross pay to get down to net pay or is it something that the employer is paying over and above and outside of the calculation of gross pay? That might be a more accurate way to think about it because there's a lot of implications when we say is it an employer tax or an employee tax? Is it an employer deduction or an employee deductions? And again, from an economic standpoint, you could argue who is actually paying the tax. What's really happening if we didn't have the laws that we have here? So it might be more accurate and easier to think about in the context of which taxes are going to be coming out of the gross pay to get to the net pay for the employee in our payroll calculation and which taxes are going to be paid by the employer and not be involved in the gross pay calculation. So we're going to list these out and if the thing says if we say yes in each column or in either column, a yes means that it's going to be an employer responsible type of item. If we say no, it's going to be non employer responsible in that column. And if it's yellow, then it's going to depend. And that's how we'll go through these. And if you memorize the last slide, then you have an advantage here if you can try to recall what you remembered on the last slide. So we're going to go through these here. We've got social security. What type of tax is that? Is it an employer tax, an employee tax or both? And we're going to say it is an employer and it is an employee tax. Confusing a bit, why? Because remember that the social security, they set up kind of like as if it was a 401k matching type of thing. So there's an employer portion to it and there's an employee portion to it. Each pay currently I believe 6.2% of the employee wages. So that's going to be on both sides. So when we see the gross paycheck calculation, the amount coming out here is really only half of the total amount that will be paid. The other half will not be coming out of the paycheck. It will be coming out of the employer's payroll taxes on their side on their checking account. Then we've got Medicare. Is it an employer tax? Yes. Employee tax? Yes. Same thing because these are the two FICA taxes and they're set up in a similar fashion in that the employer will pay for a portion of it, half of it, kind of like a matching type of idea and then the employee will pay for a portion of it. So it will be calculated in the gross pay, reducing the gross pay, but only by half, that's only half that will actually be paid. The other half being paid by the employer, not included in the calculation of net pay, gross pay to net pay paycheck calculation. And then we've got the federal income tax. Is it an employer tax? No. Now note that this, you might say, well what, federal income doesn't a corporation pay federal income tax? Yes, they do. But we're talking in the context of payroll federal income tax, meaning federal income tax that's calculated on the basis of employee wages. Not federal income tax calculated on the basis of the corporation's net income. That's a different type of federal income tax. So note, we have to be careful in the context here. We're talking about federal income tax as a payroll type tax in this case. It's not something that the employer pays, but is responsible for calculating and paying for the employee. In other words, the employer does the logistics of taking it out of gross pay to calculate net pay and then paying it to the Fed, to the government. But it's being paid on behalf of the employee out of their gross pay, not as something out of the employer funds, again, theoretically. So then we have the federal unemployment tax. Is it an employer tax? Yes. Is it an employee tax? No. This is going to be something that does not come out of the calculation of net pay, gross pay to net pay. It's not going to be part of the paycheck calculation. It's not going to be on the pay stub. The employee won't even see this. For that reason, and because it's a lot smaller, we may not have any familiarity with it just by being an employee. The employer, on the other hand, will have to fill out a yearly 940 and pay this tax. Smaller tax, but it's still something that's a pain because you've got to calculate it. There's a little cap on it and everything, so you have to report for it. So that one comes out of the employer portion, not out of the employee. State unemployment. Is it an employer tax? Yes. Is it an employee tax? It depends on the state. Now this one is that unusual one in that we usually are not touching in on the state taxes here because it's going to change from state to state. We can apply the same principles most of the time to the states, but remember that the state unemployment tax is closely tied, linked to, related to the federal unemployment tax because of the way the legislation basically happened. So that means that every state really kind of has a minimum standard in order to meet the regulations that were basically put in place as the federal unemployment tax was put in place. In other words, in order to get a lower tax rate for the federal tax, the state has to meet some minimum requirements and therefore all the states will do that so that they can keep the money in the state rather than just go to the fed. So therefore we're going to include the state tax and we're going to say, yeah, it's going to be an employer tax because that's part of what's kind of standardized, but it could also be partially on the employee as well and that's going to depend on the state. The state has more leeway to have an employee portion there. So it will be paid by the employer not included in GrillsPay and it possibly could have a portion to it depending on the location that will be a reduction from GrillsPay to arrive at net pay for our paychecks. Workers compensation. Is it employer tax? It is an employer tax. Is it an employee tax? No, not an employee tax. So workers compensation, something that's going to be paid out of the employer taxes and obviously it's for compensation for employees. We don't have any employees. We don't have workers compensation, but it's not going to be a calculation to arrive at net income. It's not coming out of the employees gross income to arrive at net income. Then we have the 401k math. If we have a matching plan, is it an employer tax? Yes. Now note that this is, we're specifically have to say that it has a matching plan like many 401ks do. If we're talking about other tax of retirement plans, then it's still a benefit no matter what because it usually has a higher amount you can put into it. But there may be differences as to whether the employer put or who puts the money in and how much is by each of these. But if there's a matching plan, then it's kind of similar to what we said in the beginning. They're not the same thing. The Social Security is not a 401k because the Fed isn't really holding on to the money in a similar, doesn't have to account for it in that way in a similar way. But the withholding is similar in that the employee is going to put some in that's going to come out of the employee check and the employer then is going to match it in some way that coming out. Not from the employee check, but from the employee check. But from the employer general checking and then voluntary deductions of the employers. No. Are they coming out of the employee? Yes. So anything that's voluntary, typically the employee has an option as to whether they want to have the deduction or not. And the employer is giving the benefit, the service, not of paying for it, but a facilitating the transaction of taking it out of the employee's check for them and making the payment for them so that the employee doesn't really have to worry about it. If the employee wants some voluntary deduction to go to a savings account or something like that, then the employer is just taking it out of the check and putting it directly to where the employee wants automatically and it's more of a service. It's going to be calculated in the calculation for net pay, however, because it's going to be paid by the employer, but for and out of the funds that was earned from the employee. Off the payroll. You.