The Internal Revenue Service notes that for tax year 2014, an employee can be paid up to $1,900 in a calendar year before the employer and employee are responsible for paying taxes on the amount. After the $1,900 threshold is reached both employer and employee are responsible for taxes.
The employer and employee are both responsible for a portion of the taxes on the amount paid to the employee. The IRS reports that an employer may choose to pay the total amount of taxes due. The employer can also request that an employee work on a self-employment basis in which case the employee is responsible for all tax amounts due on income. An employee cannot be considered self-employed if the employer provides equipment, direction and determines the time that the employee works. This rule usually applies to household workers and independent contractors.
The Huston Chronicle reports that this rule does not always apply to every situation, as most businesses must report and take taxes from an employees earnings. The Huston Chronicle states that "Federal law requires employers to withhold federal payroll taxes from employees’ pay. This includes federal income tax, and FICA taxes, such as Social Security and Medicare." There is no minimum earning requirement based on this criteria.Learn More
According to Forbes, severance pay is taxable in the year in which the employee receives it. Prior to an employee receiving a severance check, the employer should take out appropriate state and federal taxes. Severance pay is reported on the employee's W-2 form, according to Turbo Tax.Full Answer >
The only tax Amish and Mennonites are exempt from is the Social Security tax, and only if they are self-employed. For the most part, they pay the same taxes that other Americans do.Full Answer >
The three primary purposes of taxes are to fund the government, redistribute wealth and mitigate the negative effects of many consumer products. Without the taxation system, the government and most social services would not be able to function.Full Answer >
In most cases, monetary damages awarded by a court of law in the United States are treated as taxable income, with the exception of awards for physical injury or physical sickness. According to Nolo, these exceptions are explained in code 26 U.S.C. § 104(a). Other monetary awards arising from law settlements are taxed at ordinary rates.Full Answer >