Payroll Withholding Tax Basics for Both Employers and Employees
Requirements regarding withholding payroll taxes are something that every business owner should be familiar with, particularly businesses which handle their own payroll internally (as opposed to outsourcing to a payroll company). Employers are almost always required to withhold taxes from employees’ salaries, wages, and other compensation, such as commissions or bonuses.
While many people think of paying income taxes as what they do when they file tax returns by mid-April of each year, income taxes are actually considered a “pay as you go” tax. The tax returns at the end of the year then adjust the withholdings calculation depending on various other considerations such as deductions, marital status, and other income.
The employer withholds a certain amount of taxes from each paycheck which the employer is then required to turnover to the government.
There are both federal withholdings and New Jersey state withholdings.