You should start by calculating the federal income tax withholding. You need to consult lines three and five of the employee’s WF form, for the filing status and allowances, as well as the use of the IRS Circular E’s withholding tax tables, in order to figure out what the withholding amount is. The Circular E will provide you with the withholding amount, based on the employee’s allowances, their pay period and earnings and filing status.
So say for instance the employee in question earns $400 in normal wages every week. The employee will have, say, £110 in overtime earnings. You need to combine the $400 and the $100, and this equates to $510. The employee then claims that he or she is single with one allowance on the W4. According then, to page 41 of the 2010 Circular E, the total federal income tax withholding will be $41.
You then need to calculate the Social Security tax, which is currently at 6.2 percent of gross income. Medicare tax is currently at 1.45 percent.
Once you have calculated all of this, you will need to apply your state revenue agency’s income tax withholding method in order to calculate state income tax withholding. Most states require all employers to use the employee’s state withholding form, as well as the state withholding tax table (which is similar to the federal income tax withholding procedures) in order to figure out what the state income tax is. You’ll still need to check with your state revenue agency in order to access guidelines and abide by them, given that states use different systems. For instance, Pennsylvania currently charges a flat withholding tax at 3.07 percent for 2009.
So make sure you stick by the guidelines outlined above, and you won’t be landed in any legal issues. Paying tax is incredibly important, so make sure that you do it right.
So say for instance the employee in question earns $400 in normal wages every week. The employee will have, say, £110 in overtime earnings. You need to combine the $400 and the $100, and this equates to $510. The employee then claims that he or she is single with one allowance on the W4. According then, to page 41 of the 2010 Circular E, the total federal income tax withholding will be $41.
You then need to calculate the Social Security tax, which is currently at 6.2 percent of gross income. Medicare tax is currently at 1.45 percent.
Once you have calculated all of this, you will need to apply your state revenue agency’s income tax withholding method in order to calculate state income tax withholding. Most states require all employers to use the employee’s state withholding form, as well as the state withholding tax table (which is similar to the federal income tax withholding procedures) in order to figure out what the state income tax is. You’ll still need to check with your state revenue agency in order to access guidelines and abide by them, given that states use different systems. For instance, Pennsylvania currently charges a flat withholding tax at 3.07 percent for 2009.
So make sure you stick by the guidelines outlined above, and you won’t be landed in any legal issues. Paying tax is incredibly important, so make sure that you do it right.
