How to calculate payroll taxes?

[riya]

I'm new to handling payroll and I’m trying to get a clear understanding of how to calculate payroll taxes correctly. I know there are a lot of different components (like federal, state, Social Security, Medicare), but I'm not sure about the specific steps involved. Can someone walk me through the process of calculating payroll taxes for an employee?

 

[jainnorton]

Determine gross wages first. Subtract pre-tax deductions such as contributions to a 401(k). Then, using tax tables, filing status, and W-4 data, compute and withhold state and local taxes as well as federal taxes (Social Security, Medicare). Lastly, to determine net compensation, deduct any post-tax deductions.

 

[danisjohn]

In calculating the payroll taxes, also consider the gross wages of the employee first and then calculate the rate of federal, state, and local taxes imposed on social security, Medicare and income tax. Add any contributions of the employer. Calculate net pay by subtracting the taxes of employees with their gross pay and ensuring that it complies with the existing tax regulations and rates.

 

[isabel]

Begin calculating payroll taxes by taking the gross pay. Next, minus the federal and state income tax, Social Security (6.2%), Medicare (1.45%), and any applicable local taxes. In a similar fashion, employers pay to match Social Security and Medicare taxes.

 

[Shane Warne]

To calculate payroll taxes, start with an employee’s gross wages. Subtract pre-tax deductions (like retirement or health plans). Apply federal income tax using IRS withholding tables, then calculate Social Security (6.2%) and Medicare (1.45%). Add any state/local taxes. Employers also match Social Security and Medicare contributions.