Any Tax You Withhold From An Employee – Small Entrepreneurship

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social security taxYour employees file personal income tax returns that reconcile the amounts you have withheld with the amounts they owe.

Each employee contributes half the Social Security and Medicare tax due, and your company contributes the other half. Needless to say, any tax you withhold from an employee, plus your matching contribution for Social Security and Medicare, must be deposited with the IRS on a monthly basis. Nevertheless, mostly there’s not an employer matching requirement for income taxes. You may also be required to withhold income tax from your employee, relying upon the percentage of exemptions he claims on his W4 form. Notice, you must calculate the Social Security, Medicare and income taxes to withhold from your employees for every payroll you process, as an employer.

Calculate any employee’s gross wage. Therefore in case an employee’s salary is 2000 per paycheck. Do not include the matching portion in your calculation, if the company matches employee contributions. Now pay attention please. Multiply the actual number of hours the employee worked throughout the pay period by the employee’s hourly wage, if the employee is hourly. Make sure you leave a comment about it in the comment form. Common pre tax deductions include employee contributions to health certificate premiums and 401 plans. Work on one employee at a time. Gross wage is identical amount per pay period as directed by the employee’s salary rate and your pay frequency, I’d say in case the employee is salaried and has no overtime. The result is the employee’s pay subject to tax. You must make any calculation separately. Deduct any ‘pretax’ deductions the employee authorizes.

Multiply the employee’s gross wage by 2 percent.


This is the employee portion of Social Security Tax. For 2011, multiply the pay subject to tax by 2 percent. This is the employee portion of Medicare tax. The employee’s gross wages are subject to Social Security and Medicare tax. Use the pay subject to tax for the purpose of calculating income tax withholding only. Employees contribute less Social Security tax for 2011 only. Just think for a moment. Multiply the employee’s gross pay by 45 percent.

Look at the employee’s W4 withholding allowance certificate. Do not withhold any income tax, if your employee claims Exempt. Use the filing status and number of exemptions the employee claims to calculate the percentage of federal income tax to withhold. Reference the table that matches your pay frequency and the employee’s filing status and number of exemptions claimed on ‘WLocate’ your employee’s pay subject to tax on the table and match it with the column that indicates the employee’s number of exemptions. Look at the withholding tables in IRS Publication Use the wage bracket tables in the back of the publication. Basically, the number on the table is the percentage of federal income tax to withhold.

Multiply the employee’s gross wage by 65 percent.

Add the employee Social Security and Medicare contributions, your employer contribution and the employee’s federal income tax withheld. Complete these steps for any employee. The result is the total quantity of tax that must be deposited on behalf of the employee. This is the quantity of your company’s Social Security and Medicare tax matching contribution.

Add the percentage of tax that must be deposited for every employee and deposit the tax with the IRS on the 15th of any month for the previous month’s payroll. She is a IRS Enrolled Agent and was a writer for these topics since Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver. Alia Nikolakopulos has over a decade of experience resolving tax and finance problems, with a background in taxation and financial consulting. You must deposit the tax electronically through the Electronic Funds Transfer Payment System. In

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