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There are several variables that impact the calculation of your federal income tax withholding rate, for example: your marital status, your number of withholding allowances (exemptions) and the amount of gross earnings per pay period as well as other payroll reductions such as health insurance premiums or union dues and fees. These all are combined to determine the amount of federal income tax that is withheld from your paycheck.
In order to calculate your income tax withholding rate, you will need IRS Publication 15 Circular E and your completed W-4 form; you can download Publication 15 Circular E from the IRS website. Once you have the publication, there are several methods that can be used to calculate the tax withholding rate. In this guide we will show you how to calculate the withholding rate for a single person, with 1 exemption, that has as a gross monthly income of $2000 and is paid twice a month ($1000 twice a month). Here are the steps:
What You Will Need:
•IRS Publication 15 Circular E
•Completed W-4 Form
Step One – Finding the Correct Tax Rate Table
Once you have completed IRS Form W-4 Payroll Deductions Worksheet, you will need to locate the appropriate table in the IRS Publication 15 Circular E. The tables for tax rates are generally located closer to the back of the publication (2008 version has 69 pages). You will need to make sure that you use the correct table that corresponds with your marital status and pay period. For our example: the taxpayer is single and is paid twice a month; therefore, we will use the tax rate table for “Single Persons - Semi-Monthly Payroll”. In this case, the table that we need is located on pages 48 and 49. However, tables for different marital statuses and pay periods are on different pages.
Step Two - Determining the Tax Withholding Rate
Once you have found the correct tax rate table, determining your federal income tax withholding rate is fairly simple. The table will have two columns to the left of the page that show incremental dollar amounts. These dollar amounts are the cutoff amounts for a particular withholding rate. Furthermore, at the top of the table there are a series of boxes with numbers ranging from 0 to 10; these indicate the number of exemptions that were claimed on your W-4 form.
Since the taxpayer in our example has a gross monthly income of $2000, and is paid twice a month, we will use the figure of $1000 for determining the amount of income tax to be withheld for one pay period. So, we can now look to the left side of the page and find the cutoff amounts that include the $1000 amount. In this particular case, the cutoff amounts of $1000 - $1020 are actually located on page 49. Once we have located the appropriate cutoff amounts, we look to the top of the page for the box with the correct number of exemptions. In this example, the taxpayer is claiming only one exemption; therefore, we would use the amount that is in the same row of the cutoff amounts $1000 -- $1020 and in the same column as the column with the number “1” listed in it, and finding the tax rate amount that meets both conditions. The amount of text to be withheld would be $97.
Of course, the withholding rate will vary for all individuals, and depends upon the factors described above. Moreover, determining the withholding rate is something that employees normally do not do. But, if you're curious or simply want to make sure that your employer is withholding the correct amount, then you can use the procedure described here to calculate your federal income tax withholding rate.
In order to calculate your income tax withholding rate, you will need IRS Publication 15 Circular E and your completed W-4 form; you can download Publication 15 Circular E from the IRS website. Once you have the publication, there are several methods that can be used to calculate the tax withholding rate. In this guide we will show you how to calculate the withholding rate for a single person, with 1 exemption, that has as a gross monthly income of $2000 and is paid twice a month ($1000 twice a month). Here are the steps:
What You Will Need:
•IRS Publication 15 Circular E
•Completed W-4 Form
Step One – Finding the Correct Tax Rate Table
Once you have completed IRS Form W-4 Payroll Deductions Worksheet, you will need to locate the appropriate table in the IRS Publication 15 Circular E. The tables for tax rates are generally located closer to the back of the publication (2008 version has 69 pages). You will need to make sure that you use the correct table that corresponds with your marital status and pay period. For our example: the taxpayer is single and is paid twice a month; therefore, we will use the tax rate table for “Single Persons - Semi-Monthly Payroll”. In this case, the table that we need is located on pages 48 and 49. However, tables for different marital statuses and pay periods are on different pages.
Step Two - Determining the Tax Withholding Rate
Once you have found the correct tax rate table, determining your federal income tax withholding rate is fairly simple. The table will have two columns to the left of the page that show incremental dollar amounts. These dollar amounts are the cutoff amounts for a particular withholding rate. Furthermore, at the top of the table there are a series of boxes with numbers ranging from 0 to 10; these indicate the number of exemptions that were claimed on your W-4 form.
Since the taxpayer in our example has a gross monthly income of $2000, and is paid twice a month, we will use the figure of $1000 for determining the amount of income tax to be withheld for one pay period. So, we can now look to the left side of the page and find the cutoff amounts that include the $1000 amount. In this particular case, the cutoff amounts of $1000 - $1020 are actually located on page 49. Once we have located the appropriate cutoff amounts, we look to the top of the page for the box with the correct number of exemptions. In this example, the taxpayer is claiming only one exemption; therefore, we would use the amount that is in the same row of the cutoff amounts $1000 -- $1020 and in the same column as the column with the number “1” listed in it, and finding the tax rate amount that meets both conditions. The amount of text to be withheld would be $97.
Of course, the withholding rate will vary for all individuals, and depends upon the factors described above. Moreover, determining the withholding rate is something that employees normally do not do. But, if you're curious or simply want to make sure that your employer is withholding the correct amount, then you can use the procedure described here to calculate your federal income tax withholding rate.
