Federal payroll tax framework for California employers.

The Four Federal Payroll Tax Categories

StandardFICA (SS/Medicare)
FederalUnemployment (FUTA)
WithholdingIncome Tax
Personal LiabilityTrust Fund

Federal payroll tax.
Tax Rate2
FICA (Employer) 6.2% SS + 1.45% Medicare
FUTA 0.6% after state credit
Withholding Federal income + SS + Medicare + add’l Medicare
Trust Fund Recovery 100% of withheld trust fund tax

Quick Reference

Jump to: FICA, FUTA, withholding, or TFRP.

1. FICA (Social Security + Medicare)

Employer pays 7.65% (6.2% SS + 1.45% Medicare) matched from employee wages.

If this is you: Employer of W-2 workers. FICA applies to all wages up to SS wage base (higher for Medicare). Non-discretionary.

FICA Compliance

  1. Calculate per-employee FICA.
  2. Withhold employee match.
  3. Deposit semiweekly or monthly.
  4. File Form 941 quarterly.
  5. Reconcile annually.

2. FUTA (Federal Unemployment)

Employer pays 6% on first $7,000 of wages; reduced to 0.6% with state unemployment credit.

If this is you: FUTA deposit quarterly. Form 940 annually. California FUTA credit applies if state UI deposits timely.

3. Withholding Obligations

Employer withholds federal income tax, employee FICA, and additional Medicare tax.

If this is you: Withhold per Form W-4 information. Deposit with FICA. Track carefully — withheld amounts are “trust fund” taxes.

4. Trust Fund Recovery Penalty (IRC §6672)

Personal liability for responsible persons who willfully fail to collect/pay trust fund tax.

If this is you: Business owner or financial officer with authority over payroll tax deposits. TFRP exposure equals 100% of unpaid trust fund tax. Personal assets at risk.

TFRP exposure? Personal liability is serious. Book consultation.

Federal Payroll Tax Document Lookup

Federal payroll docs.
Document Purpose
Form 941 Quarterly Federal Tax Return
Form 940 Annual FUTA Return
Form W-4 Employee Withholding
Form W-2 Annual Wage Report
IRC §6672 Trust Fund Recovery Penalty
Form 2751 TFRP Proposed Assessment

Federal Payroll Statute

  • 3-year assessment statute.
  • Unlimited for fraud.
  • 10-year collection statute (CSED).
  • TFRP follows underlying employment tax statute.

Federal Payroll Outcomes

Federal payroll outcomes. Source: Brotman Law practice.
Issue Resolution Path
Employment tax balance Installment, OIC, CNC, bankruptcy
TFRP personal liability Challenge responsibility / willfulness
1099 reclassification Federal + CA EDD coordination
Late deposits Penalty abatement possible

Federal Payroll Escalation

Return Filing

Form 941 quarterly, Form 940 annually.

Audit or Deposit Issue

IRS review of payroll tax.

TFRP Interview

Personal liability determination for responsible persons.

Assessment and Enforcement

Federal collection of balance.

First 48 Hours of Federal Payroll Issue

  1. Confirm balance and periods.
  2. Assess TFRP exposure.
  3. File Power of Attorney.
  4. Engage counsel.
  5. Propose resolution.

★Brotman Law handles federal payroll tax matters coordinated with California. Based in San Diego.

The ROI Question

TFRP personal liability can be life-altering. Professional defense of responsibility and willfulness determinations is essential.

EDD Payroll Tax Audit on the Way?

California EDD audits typically focus on worker classification — whether your independent contractors should have been treated as employees. The stakes go beyond back payroll taxes: penalties, interest, and potential personal liability for responsible parties. If you’ve received an audit notice or you’re in the middle of one, the response strategy matters.

Discuss My EDD Payroll Audit →    Or call: (619) 378-3138

When to Engage

  • TFRP interview or assessment.
  • Federal + CA coordination.
  • Employment tax audit.
  • Material unpaid employment tax.

Federal payroll tax issue?

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