How is the amount of taxes deducted on my pay check determined?

Question

I would like to know how they come up with the amounts deducted that come on my paycheck? There was the option of me paying taxes, or it just being deducted. I would just like to know that the boss isnt taking a larger share than necessary for taxes.

thanks.

Answer 1

Payroll taxes are deducted based on what you claimed on your W-4.

For Federal Income Tax, use the link that wartz provided. I think that you need to start on page 35. For State Income Tax, find the similar publication for your state. Social Security Tax is always withheld at 7.65% until you earn about $94,000 (not sure of the exact number) then it is withheld at 1.45%.

If you do some planning, you can adjust your W-4 so you can only have enough taxes withheld to "break even" at tax time. I usually suggest that you can claim 1 exemption on your W-4 for every $3400 in planned deductions (personal exemptions and either standard deduction or itemized deductions) for the year.

Answer 2

Paychecks can have many different deductions:

Federal tax: determined to some extent by your reponses on the W-4 form - how many deductions you are claimings...

social security tax
state income tax
local income tax
etc.

all of them except the Federal should have the exact same percentage for all employees in your company or your town.

Answer 3

hottotro... (answer 3) is almost correct. The amounts for state and local tax sometimes vary based on the state equivalent to the W-4. Whatever is withheld for taxes is sent to the IRS and/or state for which it is withheld. If the total at the end of the year is more than necessary, you receive a refund. You can adjust your W-4 to withhold less if you normally receive a refund.

Answer 4

By the number of allowances you claim on your Form W-4 and the tax rates.

Answer 5

How many allowances are claimed on your W-4 form. The more allowances you claim, the less that is taken out right down to ZERO. You, my friend, are the one that determines that.