The Necessary Steps That You Can Use To Calculate Federal Tax Withholdings

The process of calculating federal tax withholdings can be frustrating. This is because it is a complex process to figure the IRS tax code. This is an increasingly growing problem because f the rise in the number of people who are underpaying taxes. Read on to know what you need to put in mind when calculating federal tax withholdings. Click here to check out  The 12 Steps Of Calculating Federal Tax Withholdings.

Start by using the IRS withholding calculator. This will assist you in knowing the lot that is withheld. However, regardless, you need to get a new W-4 form. Find out your current withholding from the last 1099 or W-2 form. The next step would be to identify the gross income for the year. It is advisable to know your filing status. This is because it will help in determining the federal tax withholding rate. The status can be either married, single, qualifying widow or head of household.

Also, you need to find out your allowance. It is essential when it comes to filling the W-4 form. It will help you in knowing the amount that needs to be withheld from your paycheck. More allowances means that the amount that will be withheld is less. If you have zero allowance, the amount withheld will be more or a larger refund. The next step would be to claim your deductions. This is in case the deductions are more than $6300. You have to deduct expenses such as retirement payments, donations and healthcare costs. It is advisable that you check with IRS. The IRS has a Publication 15 that shows what amount is needed to be withheld from a paycheck. Visit this link for more info on how to  Calculate Federal Taxes.

It is important you calculate the percentages. This information can be got from page 43 of the IRS publication. It will help you in calculating the withholding percentage. You need to identify your allowances and then multiply it by the amount that is listed on table 5. You will determine this by how often you get paid. later you need to subtract that amount from the pay. Afterwards, use the tables provided on pages 45 and 46 to know your filing status and the frequency in which you get paid. This will determine the income tax that is withheld.

After completing the calculation of federal tax withholdings, you have to find the payroll withholdings. Calcuvate your social security tax. The process is a simple one. You need to multiply your gross pay by 6.2%. But for Medicare tax, you multiply your gross pay by 1.45%. Check for any additional Medicare taxes.If you make a specific amount, you will be required to make payment for additional Medicare taxes. For single earner who get more than $125,000 in a year or if you are married and make more than $250, 000, you should pay 0.9% as Medicare taxes.
  
Get more information about tax accounting at http://www.ehow.com/about_4728517_tax-accounting_.html.