7 Things to Know About Payroll Taxes

Every employer has to withhold some money from their workers' paychecks in order to pay taxes to the federal and local governments. In Santa Ana, CA, there are countless rules and regulations surrounding payroll taxes, so it can be hard to know exactly how much to withhold. If you're struggling with this issue, you should contact a tax specialist, who can help you avoid tax problems.Payroll tax debt is a serious issue because the government can come after your personal assets. As soon as you notice that you can't pay, you should take action. The IRS has designed a comprehensive forgiveness program, which can lighten your tax burden or allow you to spread out your payments over several years. Let's have a closer look at what payroll tax is and what you can do if you can't pay your debt.


7 Things to Know About Payroll Taxes

1. They Pay for Various Services

When an employee earns an income, they don't receive the entire amount because a certain portion of the money goes to federal and state taxes. This system is designed to ensure that citizens enjoy a high standard of living. The federal portion of the taxes funds social security and medicare, both of which are programs that benefit people who have reached retirement age and may no longer be working.

Additionally, there is a component called the FUTA unemployment tax, which is designed to help people who have lost their jobs. Employers are responsible for paying for unemployment insurance and employment training, and state disability tax and personal disability tax are both withheld from employees.

2. The Employer Must Pay Them

Although many of these taxes are deducted from the employee's salary, the employer is in fact responsible for paying them. Before you create your workers' paychecks, you must calculate how much money to withhold from each one. For example, you should deduct 6.2% for social security tax from all employees, but only up to $147,000. If the person earns more, they don't pay additional SST.

Similarly, medicare tax amounts to 1.45%, but if your workers earn more than $200,000, they have to pay a higher rate. In addition to these various taxes, you also have to consider your employees' federal income tax, which could range from 0% to 37%, depending on their income. What's more, they might have post-tax deductions like child support or wage garnishment.


3. The Laws Can Be Confusing

As you can see, the laws surrounding payroll taxes are extremely complicated, especially when you employ various people who are all earning different salaries. For employers who aren't trained in accounting, it's almost impossible to make accurate calculations without help. For this reason, contacting a tax specialist is essential, especially in your first years of running a business.


An expert will be able to explain the different taxes to you and let you know how much your employees should be paid after deductions. What's more, they have access to the software and tools to create accurate, easily understandable paychecks. That way, you don't risk withholding too little money or misleading your employees.


4. The IRS Can Come After You for Unpaid Taxes

Sometimes, employers aren't able to pay the entire amount they owe the IRS. For example, they might not have properly documented their employees' income and taxes, they might have failed to withhold the correct amount, or they could have used the money that was meant for the IRS to pay for business equipment. It's important to remember that payroll tax money doesn't belong to your business, and you should always set it aside in a dedicated account.


If you fail to pay tax on your employees' income, the government will come after you. You won't only have to pay back all the tax you owe, but you will also be charged a hefty penalty, called the Trust Fund Recovery Penalty (TFRP). Usually, this is equal to the amount of taxes you have withheld. Therefore, if you owe the IRS $25,000, you will have to pay a total of $50,000.


5. A Great Tax Resolution Specialist Helps You Resolve Problems

As you can see, not paying tax on your workers' income is a serious issue, and you should address it as soon as possible. When you notice that you won't be able to pay your taxes, get in touch with a tax resolution specialist. Ideally, you should speak to a professional before your bill is due because it's much easier to find a solution at that stage.


However, it's never too late. The IRS forgiveness program is designed to lighten the tax burden of both individuals and businesses and help them make overdue payments. When you speak to a competent tax expert, they can lay out the various options and help you decide which one could be suitable. Depending on your individual situation, you might be able to spread out your payments, or you could pay only a part of the tax.


6. You Can Set Up an Installment Agreement

Since the pandemic, countless businesses have struggled to make ends meet. If you used some of the funds meant for the IRS to pay for your business expenses, you're not alone. Fortunately, almost everyone is eligible for an installment agreement, which allows employers to spread out their tax payments over several months or even years.

Your tax resolution expert can let you know whether an IA would be suitable for your company. For example, it is a great option for businesses that have recovered from a temporary cashflow issue and will be able to pay off their debts eventually. By spreading out the payments, you can take pressure off your business's finances while still meeting your obligations.


7. You Can Make an Offer in Compromise

Sometimes, paying off the entire amount is simply not realistic, especially when you consider that the TFRP doubles the bill. But even if you believe you can't cover your outstanding tax bill, you should never ignore warnings by the IRS because the government has immense collection power. If you fail to communicate with them, they might come after your personal assets such as your home or your savings accounts.

An offer in compromise is suitable for businesses that can't pay off their debt. Once the OIC gets approved, you only have to pay a part of what you owe, and the rest is forgiven. Although this might sound like the perfect solution, it's very hard to obtain an OIC, and you shouldn't attempt to do so on your own. Instead, ask your tax specialist whether you could be eligible.


Every American business is responsible for deducting payroll taxes from employees' paychecks. There are various taxes, which are designed to pay for services such as medicare, social security, and unemployment insurance. To make sure you withhold enough and don't run into issues, you should work with a tax expert when setting up your business.If you've fallen behind on your payments, it's important to act fast. Unless you pay off your debt or you make an offer in compromise, the IRS can gain access to your personal assets like your home and your bank accounts. Call us now at Tax Alliance in Santa Ana, CA to discuss your situation with one of our specialists.

More Blogs

Unlocking Hidden Deductions: What You Need to Know for a Tax-Savvy 2024

While the process of filing taxes can seem daunting, there's good news: there are numerous deductions available that can help you lower your tax bill and keep more money in your pocket.
Read More...

Top 10 Common Tax Filing Mistakes and How to Avoid Them

Whether you're filing your taxes independently or seeking assistance from a professional tax preparer, being aware of these mistakes and taking proactive measures to prevent them can help you navigate through tax season with confidence and peace of mind.
Read More...

Preparing for a Stress-Free Tax Season: A Step-by-Step Guide

With proactive preparation and a structured approach, tax season doesn't have to be a source of anxiety.
Read More...

Navigating Tax Changes: Your Comprehensive Guide to the 2024 Tax Season

From January 1st to April 15th, individuals and businesses will gather their financial documents, crunch numbers, and submit their tax returns to the Internal Revenue Service (IRS) or relevant tax authorities.
Read More...

DIY vs. Professional Tax Preparation: Making the Right Choice for You

The decision to pursue DIY or professional tax preparation should be based on your personal circumstances, priorities, and preferences.
Read More...

Former Los Angeles Politician José Huizar Sentenced to 13 Years in Federal Prison for Corruption and Tax Evasion

L.A. News: Former Los Angeles City Councilmember José Luis Huizar has been sentenced to 156 months in federal prison for orchestrating a corruption scheme during his tenure in City Hall and for tax evasion.
Read More...

How much is California property tax?

Beyond funding local services, property taxes are a key element of California's tax structure. Understanding the intricacies of property tax assessments empowers homeowners to actively participate in supporting their communities while managing their own financial responsibilities.
Read More...

What is the property tax rate in Santa Ana, CA?

Nestled in the heart of Orange County, Santa Ana, CA, is known for its vibrant community, diverse culture, and unique charm. If you're a resident or considering making Santa Ana your home, it's essential to grasp the intricacies of property tax rates specific to this locale.
Read More...

Which city in California has the highest property taxes?

Property taxes play a pivotal role in California's financial landscape, serving as a primary source of revenue for local governments.
Read More...

Can I claim tax relief in Santa Ana?

ax relief is a set of provisions or measures implemented by government authorities to alleviate the tax burden on certain individuals or groups.
Read More...

How much tax relief can I claim in Santa Ana?

Claiming tax relief is not merely about seeking monetary advantages; it's a strategic approach to bolstering personal and familial finances.
Read More...

Nervous About Tax Season? Work With Experienced Tax Consultants!

When you trust a Tax Alliance professional to handle your taxes, they'll conduct any necessary communication with the IRS. In addition, they have advanced automation technology that enables them to contact the IRS as quickly as if they shared an office. You know how critical this feature is if you've ever found yourself on hold while calling the IRS. When dealing with your finances, you want to promptly handle any questions or issues without waiting for the next available representative.
Read More...

Do You Need Tax Relief?

Due to job loss, the increasing cost of living, and issues related to the Coronavirus pandemic, millions of Americans currently have trouble paying their taxes. While the IRS is strict and believes that almost everyone should pay the full amount, there are various forms of tax relief available to citizens. By working with a good tax consultant, you can find out whether you qualify for the forgiveness program and if so, which option is the most suitable.
Read More...

7 Things to Know About Payroll Taxes

As soon as you notice that you can't pay, you should take action. The IRS has designed a comprehensive forgiveness program, which can lighten your tax burden or allow you to spread out your payments over several years. Let's have a closer look at what payroll tax is and what you can do if you can't pay your debt.
Read More...

7 Signs You Need Help Dealing With Your Back Taxes

In the past year, millions of Americans haven't filed or paid their taxes on time. While some have simply forgotten the deadline, others are struggling to pay due to a lack of funds or a bad business year. Fortunately, there are specialists who can provide tax help to anyone who is facing an IRS audit, is at risk of a lien, believes their taxes are unfair, or who doesn't have the money to pay their back taxes.
Read More...

8 Tax Relief Options That Actually Work

Being saddled with major tax burdens is no fun, and as we've all learned, there is absolutely no way to avoid taxes. There are, however, ways to reduce tax liability so the final bill isn't so overwhelming. Some of these apply to general tax filing and how taxpayer liability is calculated, while others apply to situations in which back taxes are owed. Here we look at a number of effective tax relief options that apply to both scenarios.
Read More...

When Should You Consider Using Tax Resolution Services?

The best time to hire a tax professional to handle your back taxes is at the first sign of trouble. By law, the IRS must provide you with written notice that you are in default, and they must give you time to appeal or contest the amount owed. Hiring a professional at this point will allow them to look over your taxes and assess whether or not the tax bill is accurate.
Read More...

8 Reasons to Work With a Consultant for Tax Resolution

If you haven't filed tax returns for many years, you may be worried about legal repercussions. A tax consultant will alleviate your worry by investigating your situation and helping you determine what steps you should take. This could involve seeking past employment information to enable filing tax returns for the years in question, but this isn't necessarily always the case.
Read More...

Are Your Wages Being Garnished? Start the Tax Resolution Process Today

Are Your Wages Being Garnished? Start the Tax Resolution Process Today
Read More...

How Do IRS Tax Liens Work?

A tax lien is a legal claim the government has to your property. They will place it on your home, bank account, or other assets when you have failed to pay off the tax you owe for an extended period of time. You will receive such a lien after the IRS has determined what you owe them and sent you a bill for it. If you don't come up with the amount in a timely manner or you refuse to pay, the government is legally allowed to garnish your wages or your property.
Read More...

How Can You Avoid or Stop an IRS Bank Levy?

Tax debt is a very common problem in America at the moment, and it's trickier than many other kinds of financial issues. You can't simply have it written off during a bankruptcy because many types of tax debt are considered essential, just like alimony and child support. One of the ways the IRS can collect the outstanding amount is an IRS bank levy. Fortunately, tax resolution services can help you to stop such a process and regain control.
Read More...

How Do You Qualify for an "Offer in Compromise"?

In general, the IRS expects taxpayers to come up with the full amount they owe, and they believe that most people are able to pay this. Nevertheless, they recognize that there are certain special circumstances that should be taken into consideration. If you genuinely can't pay your debt without having to struggle financially, the IRS may offer a compromise and allow you to pay less than the original amount.
Read More...

How Does IRS Tax Resolution Work?

With something like wage garnishments hanging in the balance, owing the IRS money can be a huge deal and a difficult financial burden to bear. However, IRS tax resolution is actually easier than many people believe. When you work with seasoned tax experts, you can resolve your tax debt easily.
Read More...

How Far Back Can the IRS Audit You?

Dealing with the IRS because you made a mistake on your tax return or you haven't paid your taxes is a stressful process, and it's almost always best to hire tax resolution professionals to help you out. If you are worried about how you filed your taxes this year, you might be wondering about the auditing process. How far back can the IRS audit you? Fortunately, there is a time limit, and in most cases, an audit happens in the same year you filed your return.
Read More...

How Does a Tax Audit Work?

It can be very stressful when the IRS lets you know that you are being audited. Although this doesn't always mean that there is an issue, there's a good chance that you owe the IRS and will have to pay penalties and back taxes. The best way to stay on top of the situation is to get in touch with a great tax resolution company that can help you to resolve the situation. Let's have a look at what happens when you get audited.
Read More...

How Long Does an IRS Audit Take?

Every year, a proportion of the population is chosen for IRS tax auditing. If you've received a notification that you have to undergo such an audit, you might be worried about the process and how it will affect your life in the next months. But how long does an IRS audit take, and what can you expect from the process? In today's article, we will go over the different factors that affect your audit and its duration.
Read More...

What Is the Penalty for Late Taxes?

Late taxes are always bad news, whether it's late to file or late to pay. If you don't file by the tax filing deadline, you might be looking at a penalty. This penalty is usually higher than the penalty you can get from not paying your taxes on time, so even if you aren't able to pay your owed taxes by the due date, you should absolutely still file on time.
Read More...

Biden Administration intends to enhance IRS enforcement against high earners and corporations

A significant focus on tax compliance and follow-up enforcement actions might be on the horizon. We previously reported that the Internal Revenue Service (IRS) Cyber Crimes Unit had indicated its determination to enhance enforcement activity connecting to income from cryptocurrencies. Those efforts are proceeding. However, if the Biden Administration has its way, cryptocurrency enforcement will simply be the tip of the iceberg when it pertains to enhanced tax enforcement.
Read More...

Biden Proposes Doubling IRS Workforce As Part of Plan to Snag Tax Cheats

President Joe Biden is proposing to double the size of the IRS, by hiring virtually 87,000 new workers over the following 10 years, as part of a sweeping strategy to chase down tax cheats. The hiring spree, part of a bid to enhance IRS funding by $80 billion, would be phased in to offer the department time to adjust, the Treasury Department said in a report Thursday.
Read More...

Payroll Taxes: What They Are, How They Work, and Why Your Business Needs Them

Everyone needs to pay taxes, including businesses and larger corporations. For most businesses, payroll taxes are the primary means of paying taxes to the government for the money earned through the business. But when a business is struggling financially, one of the first things to lose track of can often be taxes for the payroll. Fortunately, getting help from tax experts can help you recover and get your business back on track.
Read More...

What Happens If You Have Unfiled Tax Returns?

Maybe you didn't realize you needed to file a return. Maybe you did and just forgot, and now you're out of time. You've just received a letter from the IRS informing you that you've failed to pay your taxes for the last year, and now they're coming after you. However you ended up in this situation, there's no point trying to hide from it. However, all is not lost! Read on to find out how you can resolve your unfiled tax returns and quickly get your taxes back on track.
Read More...

What Happens During Wage Garnishment?

What happens when you owe money you can't pay? There are several ways it can go, depending on what the creditor decides, but one possibility is wage garnishment. Garnishment of wages means that a court (or governmental agency) orders the debtor's employer to send part of the debtor's paycheck directly to the creditor for the purpose of paying off your debt.
Read More...

How to Get Tax Help and Avoid IRS Tax Liens

If you've been unable to pay all your taxes in the past few years, you could be facing a tax lien, which essentially gives the IRS the right to your assets, including any real estate you own. However, there is professional tax help available to avoid IRS tax liens.
Read More...

How Can You Tell When You Owe Back Taxes?

Most Americans try to stay in the good graces of the Internal Revenue Service (IRS) by paying their taxes on time, but even the most diligent of payers can fall behind on their taxes once in a while. Knowing how to tell when you owe back taxes can help you stay on top of your IRS account and take advantage of programs available to assist in paying off tax debt.
Read More...

8 Signs You Should Seek Professional Tax Help

Let's face it: taxes can be complicated. True, some people have straightforward tax situations and can save a few dollars by filing their taxes themselves, but in many more cases, seeking help from a tax professional will be the better option. If it just so happens that you enjoy and are experienced with doing your own taxes, then we salute you, but if not, then here are eight signs that it might be wise to seek professional tax help.
Read More...

How to Choose the Right Tax Resolution Services

When you're dealing with tax debt, you probably know you could use some help dealing with the IRS. However, you might not know where to turn to get the help you need. Following these tips on how to choose the right tax resolution services will...
Read More...

Do You Qualify for Tax Resolution? The Answer May Surprise You!

Not being able to pay your tax debt can be scary, especially since you've probably heard about the heavy-handed tactics the Internal Revenue Service (IRS) can use to collect back taxes. The best thing you can do if you've fallen behind in paying your taxes...
Read More...

Efficiency through Automation!

Because of advancements in our technology, we are able to communicate with the IRS electronically, its as if we are in the same office! Faster service and more cost effective!

Our Money Back Guarantee!

If you are not happy with our tax services within the initial 21 days, we will give you a 100% refund of services rendered, no questions asked!

Price Match Guarantee

You find it, we will match it! Tax Alliance will match and beat (by 10%) any competitive offer. Contact our office today and receive a free no obligation tax consultation.

Call Us
Tax Alliance Logo

Get tax relief today!

Contact us for your free tax assessment consultation
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
🕒 Mon - Fri: 9:00AM - 5:00PM
✉️ info@taxalliance.com
📞 1.800.987.3051
🏢 2002 E. McFadden Avenue, Suite 110, Santa Ana, CA 92705
Vector image of Tax Alliance hero giving a thumbs up
Current Call Wait Time: Under 5 Seconds
Average Form Response Time: 5 Minutes

Efficiency through Automation!

Because of advancements in our technology, we are able to communicate with the IRS electronically, its as if we are in the same office! Faster service and more cost effective!

Our Money Back Guarantee!

If you are not happy with our tax services within the initial 21 days, we will give you a 100% refund of services rendered, no questions asked! We help our clients nationwide!

Price Match Guarantee

You find it, we will match it! Tax Alliance will match and beat (by 10%) any competitive offer. Contact our office today and receive a free no obligation tax consultation.

Call Us