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The 12 Steps Of Calculating Federal Tax Withholdings

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The process of calculating federal tax withholdings can be frustrating. This is because it can be frustrating and complex to figure out the IRS tax code. This is a growing problem due to the rise of many people who are underpaying taxes. Read on to know what you need to put in mind when calculating federal tax withholdings. Click here to check out The 12 Steps Of Calculating Federal Tax Withholdings.

You need to begin by using the IRS withholding calculator. This will help you in identifying the amount that is being withheld. You have to obtain a new W-4 form regardless. You need to know your current withholding from the last W-2 or 1099 form. The next step would be to identify the gross income for the year. You have to know your filing status. This will assist you in knowing your federal tax withholding rate. The status can be either married, single, qualifying widow or head of household.

Also, you need to know your allowances. This is vital when filling the W-4 form. It will help you know what amount is withheld from the paycheck. If you take more allowances, the less the amount that will be withheld. If you have zero allowance, the amount withheld will be more or a larger refund. The next step would be to claim your deductions. This is if the deductions are $6300 or more. You have to deduct expenses such as retirement payments, donations and healthcare costs. It is vital you check with IRS. The IRS has circular E or Publication 15 that indicates the amount that needs to be withheld out of a paycheck. Visit this link for more info on how to Calculate Federal Taxes.

It is essential to calculate your percentages. You will get this information on IRS publication page 43. It will help in calculating withholding percentage. Take the allowances and multiply by the figure you find on table 5. This will be determined by how often you are paid. Then subtract the amount out of your pay. Afterwards, use the tables provided on pages 45 and 46 to know your filing status and the frequency in which you get paid. This will determine the income tax that is withheld.

After you are through with calculating the federal tax withholdings, you need now to find your payroll withholdings. Calcuvate your social security tax. This is a simple process. You need to multiply your gross pay by 6.2%. But for Medicare tax, you multiply your gross pay by 1.45%. Confirm if there are any additional Medicare taxes.If you earn a certain amount, you have to make an additional Medicare taxes. If you are a single earner who get more than $125,000 yearly or married and earn more than $250,000 each year, you will be required to pay 0.9% in Medicare taxes.

Get more information about tax accounting at http://www.ehow.com/about_4728517_tax-accounting_.html.

 

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