A taxable wage base is the maximum annual wage on which a taxpayer must pay taxes.
How it works:
Let’s assume that Mary earns $150,000 a year as COO at the XYZ Organization, and the US government sets the taxable wage base for Social Security at $100,000 this year, which means that Mary will only pay Social Security taxes on the first $100,000 of her income.
Hypothetically, let’s say that Mary’s take-home pay is $9,000/pay period. After she has earned her $100,000 for the year the employer will stop withholding Social Security taxes. After Mary’s taxable wage base has been reached, her take-home pay might go up to approximately $9,250.
A closer look at SUI and Unemployment Compensation
Studies show that employers’ unemployment costs are rising higher and higher each year. Companies continue to fend off these ever increasing costs; however, many companies still wind up paying more then the minimum un-insurance premiums each year because they don’t have a thorough understanding of the laws.
Each state normally determines the amount of an organization’s un-insurance payment, based on the laws established in each organization’s state, along with a comparison of benefits against taxes an organization would typically pay in a given period of time.
So much of this is in the hands of the State’s interpretation, as there is nothing official about the process, which is why States are getting away with overcharging premiums unless there is a knowledgeable and watchful eye overseeing the process. Currently the law in place deems that it is not mandated for States to report any overcharging due to oversights unless the mistake is greater than 18 percent.
To learn more about how Emptech can help your organization reduce it’s employer unemployment taxes substantially, please call on us at 1-800-518-3874 or visit our website at www.empetch.com. You can also email us at email@example.com.