Aurora employers must navigate federal, state, and local payroll taxes to stay compliant. Payroll taxes cover Social Security, Medicare, unemployment insurance, and city-specific obligations. Accurate calculation and timely reporting are essential to avoid penalties and fines. Koffex Accounting offers expert support to ensure your payroll remains precise and compliant. Get Payroll Services Now
Federal Payroll Taxes
Every employer in Aurora must handle federal payroll taxes. These include:
- Social Security and Medicare: Employers withhold 6.2% for Social Security and 1.45% for Medicare from employee wages and contribute matching amounts.
- Federal Unemployment Tax (FUTA): Paid at 0.6% on the first $7,000 of wages after state unemployment tax credits. This ensures your workforce remains eligible for unemployment benefits when needed.
Accurate federal tax compliance prevents audits and penalties. Automated payroll systems can help track contributions and deadlines efficiently.
Colorado State Payroll Taxes
Employers also have state-specific responsibilities:
- State Income Tax Withholding: Deducted based on employee-provided forms similar to the W-4 and remitted to the Colorado Department of Revenue.
- State Unemployment Insurance (SUI): Employers pay varying rates depending on business experience and the state fund’s status.
Staying current with these obligations ensures employees’ taxes are correctly reported and reduces the risk of costly errors.
Aurora Local Taxes – Occupational Privilege Tax (OPT)
Aurora imposed a $2 monthly OPT on both employers and employees. Effective January 1, 2025, the OPT has been repealed. Before repeal:
- Employers withheld $2 from employees earning $250+ monthly and matched the amount themselves.
- Monthly or quarterly filing schedules depended on the business size.
Employers must now update payroll systems to remove OPT deductions and ensure accurate records for any previously withheld amounts. Failure to do so can create compliance issues.
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Payroll Tax Reporting and Compliance
Proper documentation and reporting are crucial. Employers should:
- Collect W-4 and I-9 forms for all employees.
- Deposit taxes according to federal schedules: monthly for small liabilities, semi-weekly for larger ones.
- File reports and payments with federal, state, and local authorities on time.
Non-compliance can lead to audits, fines, or interest charges. Using professional payroll services minimizes these risks.
Key Considerations for Aurora Employers
- Update payroll systems after OPT repeal.
- Monitor employee wages for accurate FICA and FUTA calculations.
- Keep documentation organized for audits or tax reporting.
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- Accurate withholding connects naturally to tax planning for freelancers for business owners with contractor employees.
- Filing and reporting procedures can link to year-end tax planning mistakes to prevent common errors.
- Managing state and local taxes can refer to tax planning for startups for new businesses navigating Aurora requirements.
Conclusion and CTA
Payroll taxes Aurora IL employers must handle involve federal, state, and local obligations. Staying current prevents penalties and ensures smooth business operations. Koffex Accounting simplifies payroll management, ensuring compliance and accuracy across all levels.
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FAQ – People Also Ask
What payroll taxes do Aurora employers need to pay?
Employers handle Social Security, Medicare, FUTA, Colorado state income tax withholding, and state unemployment insurance. Aurora no longer requires the OPT after January 2025.
Has the Aurora Occupational Privilege Tax been repealed?
Yes, the $2 monthly OPT was repealed effective January 1, 2025. Employers must update payroll systems to reflect this change.
How do I calculate payroll taxes for employees working in Aurora?
Calculate Social Security (6.2%) and Medicare (1.45%) on gross wages, FUTA on the first $7,000, and apply state withholding and unemployment rates based on employee wages.
What forms are required for employer payroll tax reporting in Aurora?
Employers must collect W-4 and I-9 forms and file federal, state, and local payroll reports according to prescribed schedules.
Are there specific local payroll taxes unique to Aurora employers?
Previously, Aurora required OPT, but this is now repealed. Employers should monitor local tax obligations in other cities where employees may work.
How do payroll taxes impact employers in Aurora?
Payroll taxes affect cash flow, reporting obligations, and compliance. Accurate management prevents fines, penalties, and legal complications.