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You worked very hard for your weekly paycheck and it is only right that you wonder what your payroll withholding tax does. It can be discouraging sometimes to see a large chunk of money taken out of your paycheck each week. However, your money that is part of the payroll withholding tax does have a job to do.
Payroll Withholding Tax
For the most part, nobody is real happy about seeing their deductions each week. For some people it could add up to money that they could use. The reality of it, though, is that the government uses the money to operate.
Federal Income Tax
Right new there are three big issues that the government faces are far as budgetary items. They would be health care, defense spending, and federal deficit. These are all paid through the tax withholding that come from your Federal and State withholdings.
For instance, if you pay in $20 a week in federal taxes your money will go to help pay for the health care, defense spending, and the deficit. If you make $1,000 a week, then $200 will go to your federal taxes.
State Income Tax
For the same reasons that your money goes to the federal government, you will also be paying into the state government. This is not true of all states however. There are some states that have to state income tax and make their revenue is in other areas such as sales tax on goods and property taxes.
This money you pay in to the state helps to pay for road programs, education, and other state referendums that need the funding. Again, this is a percentage that is based on your income and the amount of exemptions you claim on your W-4.
Social Security Benefits
This is a mixed bag and has a lot of uncomprehending rules and regulations. The main point of social security is to provide citizens with some sort of retirement program. However, through years of misuse, this is sorely in need of repair. Some of your benefits go to pay for your actual retirement, but right now it is going to pay for other the retirement of other people. A certain percentage of that is off limits for any benefits.
Medicare Benefits
Much like the social security program, Medicare was created to help people pay for the healthcare they will need in their elderly years.
Payroll Withholding Tax Is a Necessary Evil
To have your money withheld from your check is not something that anyone really enjoys, it does serve a function. There are ways to minimize the amount withheld, or you can opt to have more money withheld only to see it returned during tax time.
Payroll Withholding Tax
For the most part, nobody is real happy about seeing their deductions each week. For some people it could add up to money that they could use. The reality of it, though, is that the government uses the money to operate.
Federal Income Tax
Right new there are three big issues that the government faces are far as budgetary items. They would be health care, defense spending, and federal deficit. These are all paid through the tax withholding that come from your Federal and State withholdings.
For instance, if you pay in $20 a week in federal taxes your money will go to help pay for the health care, defense spending, and the deficit. If you make $1,000 a week, then $200 will go to your federal taxes.
State Income Tax
For the same reasons that your money goes to the federal government, you will also be paying into the state government. This is not true of all states however. There are some states that have to state income tax and make their revenue is in other areas such as sales tax on goods and property taxes.
This money you pay in to the state helps to pay for road programs, education, and other state referendums that need the funding. Again, this is a percentage that is based on your income and the amount of exemptions you claim on your W-4.
Social Security Benefits
This is a mixed bag and has a lot of uncomprehending rules and regulations. The main point of social security is to provide citizens with some sort of retirement program. However, through years of misuse, this is sorely in need of repair. Some of your benefits go to pay for your actual retirement, but right now it is going to pay for other the retirement of other people. A certain percentage of that is off limits for any benefits.
Medicare Benefits
Much like the social security program, Medicare was created to help people pay for the healthcare they will need in their elderly years.
Payroll Withholding Tax Is a Necessary Evil
To have your money withheld from your check is not something that anyone really enjoys, it does serve a function. There are ways to minimize the amount withheld, or you can opt to have more money withheld only to see it returned during tax time.
