Dorothy was right. She wasn’t in Kansas anymore. But you are, and you feel right at home in The Sunflower State. That’s why you started a small business. Whether you own the trendiest bar in Manhattan or the tastiest sandwich shop in Wichita, there’s one thing that probably doesn’t make you feel very homely: payroll taxes.
This is where we come in. We designed a handy payroll tax calculator with you in mind, so that you can focus more on your business and less on taxes. All you need to get started is to enter each employee’s wage and W-4 information. Our payroll calculator will figure out both federal and Kansas state payroll taxes for you.
Federal Payroll Taxes
First of all, we gotta give Uncle Sam his fair share. Below is a quick overview of all the steps that go into calculating federal payroll taxes. If you would like to see a more detailed explanation, feel free to check out our step-by-step guide here.
- Gross Wages. Gross wages represent the amount of money an employee has earned during the most recent pay period. The most popular methods of earning income are hourly and salary, but please don’t forget about commissions, bonuses, and tips as well.
- For hourly employees: Multiply the number of hours worked by the employee’s hourly pay rate. Make sure to calculate any overtime hours worked at a higher rate.
- For salaried employees: Divide the employee’s annual salary by the number of pay periods per year. If you pay your employees twice a month, then you have 24 pay periods per year.
- Pre-Tax Withholdings. Some of your employees may have pre-tax benefits, such as FSA, HSA, or retirement savings accounts. You need to subtract their contributions into these accounts from their gross pay before you start applying federal payroll taxes.
- Deduct federal income taxes, which can range from 0% to 37%. Withholding information can be found through the IRS, so we won’t go through all the nitty-gritty details here.
- Deduct FICA taxes to cover Medicare and Social Security taxes:
- Social Security tax: Withhold 6.2% of each employee’s taxable wages up to their wage limit in a given calendar year. For 2020, the wage limit is $137,700, so any taxable income above this amount is exempt from the Social Security tax. As the employer, you must match your employees’ tax contributions.
- Medicare tax: Withhold 1.45% of each employee’s taxable wages until they have earned $200,000 in a given calendar year. You will need to match your employees’ Medicare tax contributions dollar-for-dollar as well. Employees who earn more than $200,000 in taxable wages must pay what’s called an Additional Medicare Tax (super original, right?). The tax rate is 0.9% on top of the original 1.45%. However, only the employee is responsible for paying the Additional Medicare Tax, so you don’t have to match the extra 0.9%.
- Pay FUTA unemployment taxes: This one is all on you, as only employers are responsible for paying the FUTA tax. The rate is 6% of the first $7,000 of taxable income an employee earns annually. The tax pays for federal unemployment benefits. Note a huge caveat that you can claim a tax credit of up to 5.4% for the Kansas state unemployment taxes you pay. That means that at the end of the day, you’ll only have to pay 0.6%. Watch this IRS video on how you can claim your FUTA tax credit.
- Deduct post-tax deductions (if necessary): Some employees may have to pay court-ordered wage garnishments or child support. Deduct the proper amount here before you write that paycheck.
Kansas State Payroll Taxes and Unemployment Insurance
Now that we’ve gone over federal taxes, let’s talk about Kansas state taxes. The state’s income taxes are broken down into three brackets, with rates ranging from 3.1% to 5.7%. There are no local city payroll taxes, so your employees pay the same state taxes no matter where they live.
As an employer in Kansas, you are responsible for paying the state unemployment insurance (SUI). Rates can go up to 7.1% of each employee’s income, up to a wage base of $14,000.
If you’re a new business owner (congratulations!), your unemployment tax rate is set at 2.7% unless you’re in construction, in which case your new rate is 6.0%.
Cut Those Checks!
You’ve done it! You managed to get through both federal and state payroll tax withholdings, and now you’re ready to cut some checks.
You obviously need to make sure your employees get paid on time, but please don’t forget to set aside money for employer taxes. FICA, FUTA, and SUI payments can add up if you don’t remit them on a regular basis.
Federal tax filings are due quarterly by filing Form 941. FUTA taxes are due quarterly, but you only need to file annually using Form 940. You can pay taxes using the EFTPS payment system. Detailed information on employment tax due dates can be found here.
If all that wasn’t enough and you need any more help, here are some additional Kansas payroll tax resources that you should check out.
Kansas Department of Labor | Contact | Employer Resources
Kansas Department of Revenue | Business Registration | Business Tax Forms