How do you calculate income tax withholding anyplace?

Answer 1

YOUR QUESTION MAY HAVE BEEN REDIRECTED HERE.

There are many questions that basically come down to determining what amount is "correct" to be withheld from a paycheck. Boy do we all wish it was as easy as that! There are many factors that affect what will be taken out (withheld) from payroll. Some questioners may consider some "income tax" or a "tax", while others don't. And certainly someplaces one may be mandated by law and others voluntary or only if provided by the employer. Each is generally entirely independent and include different things in their calculation of taxable base than the other. Some have minimum or maximum limits as to what amount of that income is applicable. All of this means that even if ther was a "rate" one could use, you would not easily figure out what the rate is applied to.

Some of the items commonly withheld include: * Federal Income Tax * State Income Tax * City Income Tax * Social Security Insurance * Unemployment Insurance * And Benefits including life insurance, medical insurance, disability ins, etc. - which can even be different between different employees at the same company! The links below can give you a good approximation of what FEDERAL INCOME TAX withholding should be. However, withholding is based on an income amount that includes some things and excludes some others, so you can't just use your gross wage, as that is rarely the correct amount. Speak to your payroll provider for a full explanation of what they include and exclude. This is something completely within your control, and not a prescribed amount for everyone by law. You should work through the calculations that are part of the W-4 instructions to make sure that amount is as close to what is required as possible. Having too little withheld can cause substantial underpayment penalties as well as additional interest. Over payments are simply refunded, but it is money that you are 'loaning' the government at no interest. If you are an employer trying to figure how much you must withhold from your employees, see Publication 15: Make sure to pay special attention as to what salaries and forms of income (like fringe benefits) are subject to tax for different things. For example; the income subject to FICA can be different than the income subject to income tax withholding and the income for Federal withholding is different than the income for State withholding.

If you just want to see approximately how much will be deducted from your own pay, you can use the calculator linked below to determine how much tax will be deducted from your paycheck.

Remember that the amount of income tax deducted depends on how you fill out Form W-4 that you give to your employer. Properly doing so, and using the accompanying worksheets, is the best way to assure the right amount is withheld. IT IS NOT A FIXED OR SPECIFIC AMOUNT - YOU CONTROL IT...It is not the real amount of tax you owe. The real amount is calculated when you fill out your tax return at the end of the year, and includes other income (like interest or investments, or self employment), and applicable deductions...like dependents, mortgage interest, business losses, etc. As noted above, you want to have an amount paid in close to what you owe and because of all the variables - any two people, even at the same job and salary, rarely have the same tax situation and will actually pay the same tax, or should have the same amount withheld. Finally, you'll normally find that your payroll provider is happy to explain what is happening with yours....but I would suggest asking them sometime other than the day their reports are due!
It depends on many, many things...not the least of which is what you consider tax. Many people group all their withholdings as a type of tax, but many may not be. Workers Comp, Unemployment, even FICA are all really more an insurance payment than a withholding against an income tax. The amount of tax withheld also depends on many other things...obviously which state (or even city) your in, the amount of income your projected on earning over the year, (which helps determine your tax bracket and the percent that may be required), as well as your filing status, number of dependents and other deductions (like interest on a mortgage) or contributions to 401K, or medical slections. All these things can be adjusted for your circumstances by properly and completely filling out (or changing) the Form W-4 all employers ask you to. The variations are so numerous that it is fair to say that it would be uncommon for 2 people, working a the same job making the same salary would have the same amount withheld. There are even a number of different legal ways for the payroll provider to calculate the amount to withhold...but overall they make only a small difference. Remember, anything withheld is just being done as an estimated installment payment toward whatever tax, if any, you do ultimately owe. If too much is withheld, it is refunded. (Too little, and you could pay a penalty and interest charges). Again, adjusting your W-4 is the way to correct for any of these circumstances.