Posted by
Poor Richard Reborn on Friday, December 28, 2007 10:34:55 AM
Companies calculate, report and pay all the taxes for employees.[1] You do not have to file income tax returns if you are an hourly or salaried or commission income employee. Your employer will send you a statement of earnings at the end of each year but you do not need to file any kind of return under normal circumstances.
Companies, therefore, pay all of the taxes and are responsible for reporting both the taxes and the income paid to each employee to the New IRS. This income reporting is very important because it may affect taxes due during retirement and at your death. A big part of the New IRS’s job will be to make sure the companies are reporting and paying all the taxes. You will never be held responsible for paying taxes. If an employer fails to pay taxes due on your income, it will not affect your retirement income or estate taxes.
[1] Contract employees that work for more than one employer would have to file a consolidated statement of earnings. They would have to include the entire 33% tax in their billing rate to their clients and file returns as business owners.