What are the basic types of federal employment taxes?

There are basically three types of federal employment taxes: Employee only, Employer only, and Employee and Employer Taxes. Employee Only: Each employee is subject to Federal Income Tax (FIT) and files a personal income tax return, IRS Form 1040, at the end of the year. Federal income tax is withheld from each paycheck to offset their federal tax liability. Employer Only: Each employer is responsible for paying Federal Unemployment Tax (FUTA) on the first $7,000 of annual wages for each employee. The effective FUTA rate is generally 0.8%, subject to certain state unemployment insurance requirements. Employee and Employer: Both the employee and employer are responsible for FICA tax. FICA is made up of two components, social security and medicare. The effective rate for social security is 6.2% up to the wage base ($97,500 for 2007) and the effective rate for medicare is 1.45% with no limit.  more