Final answer:
Payroll deductions refer to taxes withheld from an employee's wages, including income tax, social security contributions, and insurance payments. The employer and employee share the responsibility for payroll taxes, and employers are responsible for reporting and paying these taxes.
Step-by-step explanation:
Payroll deductions refer to the taxes that are withheld from an employee's wages by their employer. These deductions include income tax, social security contributions, and various insurance payments. The employer and the employee share the responsibility for paying payroll taxes, with the employee typically seeing a deduction of 6.2% for Social Security and 1.45% for Medicare from their paycheck.
It is important to note that although the employee sees only their portion of the payroll taxes deducted from their paycheck, economists argue that the employer's share is likely indirectly passed on to the employee in the form of lower wages.
In the United States, payroll taxes are assessed by multiple levels of government and collected by employers. Employers are responsible for reporting and paying these taxes to the relevant taxing authorities.