A more thorough explanation:

Payroll taxes are taxes that an employer pays for each employee and deposits into an IRS account. There are two types of employment tax obligations that fall under payroll tax:

• Unemployment insurance taxes
• Contributions to employees' social security and Medicare benefits

The employer's tax is calculated based on the number and wages of its employees. In addition, the employer is required to withhold from the employee's paycheck:

• The employee's liability for federal income tax based on their wages
• The employee's own social security and Medicare contributions

Some types of wages and compensation are not subject to social security and Medicare taxes. Payroll taxes also include state employer and employee income tax liability, as well as other payroll taxes that vary by jurisdiction.

The Federal Insurance Contributions Act (FICA) is the statutory authority for the payroll deduction of federal tax payments from employers and employees to support Social Security and Medicare. This provides for a federal system of old-age, survivors, disability, and hospital insurance. The old-age, survivors, and disability insurance part is financed by the social security tax, while the hospital insurance part is financed by the Medicare tax. Each of these taxes is reported separately.

An employer has 10 employees who each earn $50,000 per year. The employer's tax obligation for social security and Medicare contributions would be:

• Social security tax: 6.2% x $50,000 x 10 employees = $31,000
• Medicare tax: 1.45% x $50,000 x 10 employees = $7,250

In addition, the employer would be responsible for paying unemployment insurance taxes and withholding federal income tax and employees' social security and Medicare contributions from each employee's paycheck.

This example illustrates how payroll taxes are calculated based on the number and wages of employees, and how employers are responsible for paying these taxes and withholding them from employees' paychecks.