Business FinancesQuestion 283 of 690
A contractor is hiring its first employee. Which federal identification number must the business obtain from the IRS to report payroll taxes?
a.A Social Security Number (SSN)
b.An Individual Taxpayer Identification Number (ITIN)
c.An Employer Identification Number (EIN)
d.A CSLB license number
Explanation
An Employer Identification Number (EIN) is the federal tax ID a business uses to report and deposit payroll taxes. A CSLB license number identifies the contractor for licensing, not for federal tax reporting.
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- An employee's gross wages for a pay period are $2,000. Using the combined employee FICA rate of 7.65% (Social Security 6.2% plus Medicare 1.45%), how much is withheld from the paycheck for FICA?
- Which payroll tax is paid entirely by the EMPLOYER and never withheld from an employee's wages?
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