Business Payroll: How to Calculate Federal Withholding Tax
ezPaycheck payroll software is the easy-to-use and flexible payroll tax solution for small businesses. It can calculate federal tax, Social Security Tax, Medicare Tax, unemployment tax, 50 state taxes, local tax and more.
Here are the instructions for federal income tax withholdings
1. Download and install the right version to calculate your paychecks
ezPaycheck 2012 comes with Year 2012 federal and state tax tables. ezPaycheck 2013 comes with Year 2013 federal and state tax tables. You should use the right version of ezPaycheck paryoll software.
If you are a new customer, you are welcome to download and test drive ezPaycheck for 30 days free with no obligation. No credit is needed. No registration is needed.
3. Why there is no federal withholding taken out of my paycheck?
According to CNNMoney, a little more than 43% of U.S. households -- or 70 million homes - will end up owing no federal income taxes for 2013.
Employee can claim allowances on the W-4. Each allowance will lower her taxable income. The more allowances she claims the less federal income tax she pays; the less she claims, the more federal tax she pays.
If you see the $0 federal tax on the paycheck, do not worry about it. Your employee's income may not be high enough to withhold federal income tax. You can test it by increasing the pay rate.
Usually such issue is caused by pre-tax deduction.
5. More Information
How to calculate the federal tax manually
If you like calculate it manually by using income tax tables, you can also refer to this article about how to calculate federal tax manually.
