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3 key health care payroll tax requirements

3 key health care payroll tax requirements 

Today we're taking a look at 3 very important health care payroll tax requirements.

The health care industry is one of the most regulated industries in the United States. So it's not surprising regulations would apply to payroll and the taxes that are being withheld on every paycheck.

(By the way, every year the Internal Revenue Service publishes an overview of federal tax regulations for employers. It's called Publication 15, (Circular E), Employer's Tax Guide. Although pretty lengthy, it provides a comprehensive overview of what's new and important as it relates to taxes and withholding for businesses.)

Here are the 3 key health care payroll tax requirements...

Payroll Period

Health care organizations with regular pay periods must withhold payroll taxes for any given pay period, even for employees who did not work that full pay period. And health care organizations that don't have a regular pay period must withhold the tax as if they paid wages for a daily or miscellaneous payroll period.

The Top of the W-4 Form

At the start of their employment, every employee should be filling out the W-4, and they should also be updating it as often as necessary. (The W-4 is the Employee's Withholding Allowance Certificate. It's basically the employee's way of telling his or her employer the correct amount of tax to withhold based on marital status, exemptions, number of dependents and other factors.) Larger health care organizations may want to develop a system to have the W-4s completed and submitted electronically.

Social Security Rules

Health care organizations often employ a wide range of workers - from minimum wage to very high earners - and therefore should understand the Social Security withholding amounts and limits.

Both the employer and the employee must contribute 6.2% (unchanged from 2015).

The Social Security wage base limit is $118,500 - meaning those making above that amount make no additional Social Security payments (unchanged from 2015).

Also, the shared Medicaid tax rate is 2.9%, which means the employer and the employee each contribute 1.45% (unchanged from 2015).

However, there is no wage base limit for the Medicare tax.

While these are 3 key health care payroll tax requirements, this is really just the beginning, especially when considering a highly-regulated industry like health care.

For more information, or to ask our award-winning customer service department a question, feel free to get in touch with us. We'd love to help you out!

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