How do you calculate taxes from payroll?

[denjoshep]

I’m trying to understand how payroll taxes are calculated. What are the main components included in payroll tax deductions, and how do employers figure out the correct amount to withhold? Are there any tools or formulas that make payroll tax calculation easier?

 

[jainnorton]

To determine payroll taxes:

1. Find out what your gross pay is.
2. To determine taxable income, deduct pre-tax deductions (such as specific benefits).
3. Utilizing tax tables and your W-4 form, determine the required deductions (Federal/State Income Tax, Social Security, and Medicare).
4. To find your net pay, deduct these from your gross pay.

 

[peterkavinsky]

Calculate taxes from payroll by withholding federal, state, Social Security (6.2%), and Medicare (1.45%) taxes from gross pay, then subtract pre-tax deductions to get net pay.

 

[nikhilrajoria]

In order to calculate the payroll taxes, add federal income taxes, Social security (6.2%), Medicare (1.45%), and any state or local taxes. Social Security and Medicare are also matched by the employers.

 

[BlissCore]

Payroll taxes are usually calculated based on your gross wages. The main components include federal income tax, Social Security tax, Medicare tax, and sometimes state or local taxes. Employers use tax tables provided by the IRS (and state agencies) along with your W-4 info to figure out how much to withhold. Many use payroll software or online calculators, which automatically apply the correct rates and deductions, making the process much easier.

 

[Lucky]

To calculate payroll taxes, determine gross pay, then deduct federal income tax (based on IRS tables), Social Security, Medicare, and any state or local taxes. Employers also contribute matching Social Security and Medicare taxes. The remaining amount after all deductions is the employee’s net or take-home pay.