Here's one example of how much this optional method would save in overall social security and medicare taxes. Ignoring all other taxes, if a worker were to earn gross wages of $10,000, the normal Social Security/Medicare calculation method would result in 7.65% being deducted from the $10,000, for a net pay to the worker of $9,235. The employer on his part would pay a matching 7.65% on $10,000, for a total Social Security/Medicare tax payment of $1,530. Under the alternate method, which allows the employer to pay the 7.65% tax on behalf of the worker, the worker could receive the same cash payment of $9,235. However, the social security tax calculation on $9,235 is still 7.65% on behalf of the worker, and 7.65% on behalf of the employer, for a total Social Security/Medicare tax of $1,413. The difference in this case would be an overall savings of $117 in Medicare Social/Security tax paid. Some slight additional savings may or may not be realized on Federal Unemployment Taxes and on certain State employment taxes, depending upon individual circumstances. An additional difference would be that the worker's reportable wages for income taxation purposes (their W-2) would be $10,000 in the first case, and $9,942 in the second case--a slight additional savings to the worker, but confusing. See the last paragraph below for how HET Online handles this situation. The savings when paying $40,000 in taxable wages could exceed $400. If the annual wage for any single worker exceeds $80,400, the savings gradually disappear, so this is not worth doing for any highly-paid worker. You could still elect to do this for other workers earning less than $80,400, however. Clients of HET Online can choose this alternate treatment if they wish, thus possibly saving them more than the amount of HET's annual fee. For HET Online clients who choose this option, we split the savings between the employer and employee, so that the $10,000 example above would come out as gross wages of $9,289.36 net pay to the worker, Social Security/Medicare tax of $710.64 paid on behalf of the worker, plus a matching $710.64 paid by the employer. (Note 710.64 + 9,289.36=10,000.00.) This reduces the total savings to $54 for the worker and $54 for the employer, but makes it easier to explain to the worker, and less confusing (though still confusing) when represented on the paystubs and on the W-2.