Utah Contractor Practice Exam

Who is responsible for paying payroll taxes?

1. Only employers

2. Only employees

3. Both employers and employees

4. State governments

The correct answer is: Both employers and employees

The responsibility for paying payroll taxes lies with both employers and employees, making it a shared obligation. Employers are required to withhold federal income taxes, Social Security taxes, and Medicare taxes from their employees' wages, sending these amounts to the appropriate tax authorities. Additionally, employers must match the Social Security and Medicare contributions made by employees, further adding to the payroll taxes they are responsible for. This system is designed to ensure that funding is available for vital social programs that benefit workers, such as Social Security and Medicare. Therefore, both parties play a crucial role in the payroll tax process, contributing to the overall tax revenue that supports various government services and programs.