Things You'll Need:
- Calculator
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Step 1
Complete a W-4 form annually to ensure that the proper amount of taxes will be withheld from your paychecks. Your withholdings are based upon marital status and withholding allowances. You do have the option to specify a dollar amount to be withheld in addition to the calculated withholding.
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Step 2
Subtract any applicable before-tax items such as 401k contributions, insurance premiums, etc. Consult your human resources department to specifically determine how your taxable income is calculated, if you are uncertain.
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Step 3
Use the Withholding Tables from Publication 15 (2009) Employers Tax Guide (link in Resource Section). You will use the table relating to your marital status and payroll period (weekly, biweekly, semimonthly or monthly, daily or miscellaneous). Once you locate the appropriate table, locate your wage range in the "If Wages Are" column. To the right, in the "And the number of withholding allowances claimed is---" column, locate the amount of allowances claimed, and follow that column to the row of your wage range. The amount at the intersection of these two columns is your federal tax for the pay period in question.
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Step 4
Calculate social security tax with this formula: gross wages x 6.2%. Gross wages must include any taxable fringe benefits and employer-paid deductions less any before-tax employee benefits. Consult your human resources department to determine exactly which before-tax benefits are excluded from social security withholding. This tax can only be deducted from wages up to $106,800 (for 2009). If you are reviewing past years, consult the Social Security (FICA) Wage Limits Table (link in Resource Section) for previous year's wage limits through 1997. Your employer's rate is also 6.2%, totaling 12.4% that must be paid for social security taxes for each employee.
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Step 5
Figure medicare tax with this formula: gross wages x 1.45%. There is no annual wage limit for medicare taxes, so it will apply to all gross wages earned. Your employer's medicare rate is also 1.45%, totaling 2.9% that he must pay for each employee.
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Step 6
Find your state's tax percentage by visiting your state's Department of Taxation website or by consulting the Tax Roundup (link in Resource Section). In Ohio, for example, there is one percentage charged for the first $5000 of taxable income, and a second percentage charged for amounts over $5000. Each state has its own regulations regarding what constitutes taxable income, as well. Once you know how to compute your taxable income, you will just multiply that figure by your state's tax percentage to determine your state tax for the payroll period.
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Step 7
Find tax rates for counties, cities, schools and other income-related taxes on your state's Department of Taxation website. You can also contact the county auditor for your location to find out what income-based taxes exist and the rates for those taxes. Multiply your taxable income (as determined by your location) with the tax percentages applicable to determine those taxes for the payroll period in question.
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Step 8
Subtract all taxes from your gross pay to determine what your net pay will be for a given pay period.
