I integrate of associated questions:
1- Is there a regulation that is used to work out sovereign taxation that is starting to be whithheld from each paycheck? we assimilate it is formed upon W-4 form enteries, magnitude of a paycheck (weekly, biweekly etc) as well as a taxation joint associated to a taxable income though can someone greatfully discuss it me what that regulation is in conditions of math denotation/expression? e.g. taxation to be funded = a x b/xy where a, b, x, y have been assorted variables as well as what those variables are.
2- When Fed taxation is withheld, is it funded opposite a sum income for that duration or a sum income reduction FICA (ss as well as medicare tax) and/or healing illness word premium? we assimilate that in box of 401k contributions, sum income reduction 401k grant = taxable income, that is afterwards used to work out FICA as well as so on. Similiarly, is state taxation funded opposite a sum income or sum income reduction fica reduction fed tax?
Thanks in advance.
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Comments: 4 comments
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bostonianinmo
November 6th, 2009 at 9:10 pm
Employers use IRS Pub 15 to calculate withholdings. You can get a copy at the IRS website.
FICA is a flat 7.65% of gross income. 401(k) contributons are NOT exempt from FICA although income for income tax purposes is.
Federal income taxes are withheld from gross income after deducting pre-tax decuctions for retirement plans, health insurance, or pre-tax cafe plans. FICA is NOT deducted from gross income to calculate income tax withholding.
State taxes are withheld based upon gross wages just like Federal income taxes are. Some states allow a deduction for FICA and some do not so state law will determine if FICA is subtracted from your wages before the withholding is calculated.
netthiefx
November 6th, 2009 at 9:10 pm
As an employer you should’ve received information alongside the forms that contain charts detailing the exact percentages to be withheld based on income / deductions / etc…
As for a formula, it is gross – %, and perhaps one allows certain deductions but as a rule it is almost always the gross that is used to calculate, FICA is social security and can not be used as a deduction.
Either way, you can order the information or possibly browse it online at http://www.irs.gov/
Judy
November 6th, 2009 at 9:10 pm
Federal tax is withheld against income after pre-tax items like 401K contributions or health insurance are deducted. FICA is not subtracted.
See http://www.irs.gov/pub/irs-pdf/p15_06.pdf for the calculations for deductions, starting on page 36.
ninasgramma
November 6th, 2009 at 9:10 pm
1. There is no algebraic formula. It is a table lookup.
2. Withholding is based on gross income before SS and Medicare deductions. If there are pre-tax deductions for health insurance, they are not part of gross income, so they do not figure into withholding. Pre-tax 401k contributions also do not figure into withholding.
Also related to your second question:
SS and Medicare are paid on employee 401k contributions, those contributions are not subtracted before FICA is computed.
State tax withholding varies, some states tax 401k contributions and some don’t. Some subtract federal income taxes.
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