You generally must withhold federal income tax from your employee's wages. To figure how much federal income tax to withhold from each wage payment, use the employee's Form W-4 (pdf) and the methods described in Publication 15.
Social security and Medicare taxes pay for benefits that workers and their families receive under the Federal Insurance Contributions Act (FICA). Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. Medicare tax pays for benefits under the hospital insurance part. You withhold part of these taxes from your employee's wages and you pay a matching amount yourself. To find out how much social security and Medicare tax to withhold and to pay, see Publication 15.
Which form do I file?
Report these taxes on Form 941, Employer's Quarterly Federal Tax Return (pdf). (Farm employers use Form 943, Employer's Annual Tax Return for Agricultural Employees (pdf).
Information courtesy of the Internal Revenue Service.