When you work as an employee, your employer is required to withhold money from your paycheck for various taxes including federal income taxes, payroll taxes (also known as FICA taxes) and, if applicable, state and local income taxes. The money withheld gets paid to the appropriate collection agencies by the employer and is credited to you when you file your income taxes. When determining how much to withhold, you need to know the number of allowances you claimed on your W-4 form. Each allowance reduces the amount of your biweekly income subject to income tax withholding, but not FICA taxes.
Things You'll Need
- IRS Publication 15 Calculator
Calculate the amount of money that will be withheld for FICA taxes by multiplying the FICA tax rate by your biweekly income. As of 2010, the rate for employees equals 7.65 percent. This rate has not changed since 1990. For example, if your biweekly income equals $1,900, you would multiply $1,900 by 0.0765 to find you would have $145.35 withheld for FICA taxes.
Multiply the number of personal allowances you claimed on your W-4 form by the biweekly allowance value, which can be found in the most recent version of IRS Publication 15. For 2010, the value of each biweekly allowance equals $140.38 so if you claimed three allowances, you would multiply $140.38 by 3 to get $421.14.
Subtract the value of the allowances from your biweekly pay. In this example, you would subtract $421.14 from $1,900 to get $1,478.86.
Subtract any other pretax contributions from your biweekly income, such as traditional 401k or traditional 403b contributions. In this example, if you contributed $200 each pay period to your traditional 401k, you would subtract $200 from $1,478.86 to get $1,278.86.
Use the tax withholding tables for your filing status, found in the most recent version of IRS publication 15, to calculate your federal income tax withholding. In this example, if you were married, you would find that you would have $91.83 withheld for federal income taxes.
Contact your state and local departments of revenue, if applicable, to obtain a copy of the tax withholding tables for your state and locality and use it to calculate how much money will be withheld from your state and local taxes.
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