How to Figure Out How Much Federal Income Tax to Withhold From an Employee Check
You must withhold taxes according to federal law from every person that is in your employ. Each pay period you will calculate each employee's gross pay, then make all necessary deductions. You need up-to-date tax tables to correctly take care of your employees' withholding taxes. Throughout the year you have to keep records of the amount each employee has paid in.
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Instructions
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Contact the IRS for the current booklet with "Wage Bracket Table for Income Tax Withholding" (Circular E). You can find this on the publication feature of the IRS website. Download and print a copy of the entire publication (see Resources).
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Familiarize yourself with Circular E. Take note that there are sections for weekly, bi-weekly, semi-monthly, monthly, quarterly, semi-annual, daily or miscellaneous payroll charts.
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Figure out your employee income for a pay period. Check the employee information in your files to see if the person filed single or married status. Confirm how many allowances or dependents are listed for the employee.
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Search the chart for the employee withholding amount for the pay period. For instance, look at the Married Person (Weekly Payroll Period). If the employee is paid more than $152 but no more than $479 after subtracting withholding allowances, you must withhold 10 percent on the excess over $152.
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Fill in the federal withholding amount on your employee's pay check stub. Subtract the amount from the gross total of the paycheck.
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Tips & Warnings
Federal income tax must be withheld from main wages, salaries, overtime and bonuses.
Your employee must decide how many allowances are to be in his filing status. You do not decide this.
Use true dollar amounts and always look up deductions on the wage bracket table. Do not guess at anything when making out these documents.
