7 Steps to Calculate Payroll Taxes
Calculating and withholding payroll taxes is an important and time consuming part of the payroll process for businesses. Payroll taxes are the taxes that employers are required to deduct from their employees’ paychecks, including federal income tax, Social Security tax, and Medicare tax. We have put together a list of the must haves in order to complete this process; however, if you need help, we are here for you. It’s what we do at Certified Payroll Advisors…
Here are the steps to calculate and withhold payroll taxes:
- Determine the employee’s gross pay: This is the amount of money an employee earns before any deductions.
- Determine the employee’s federal income tax withholding: This is calculated based on the employee’s gross pay, tax filing status, and the number of withholding allowances claimed on their W-4 form. If you need a copy just go to our Payroll Documents page
- Determine the employee’s Social Security tax withholding: This tax is currently 6.2% of an employee’s gross pay up to a certain limit.
- Determine the employee’s Medicare tax withholding: This tax is currently 1.45% of an employee’s gross pay with no limit.
- Calculate any additional state and local taxes: Depending on the state and locality, there may be additional taxes that need to be withheld.
- Subtract all tax withholdings from the employee’s gross pay to determine the net pay: This is the amount of money that the employee will receive in their paycheck after all taxes and deductions are taken out.
- Finally, remit the payroll taxes to the appropriate tax agencies on a timely basis.
It’s important to note that payroll tax rules and rates may change over time, so it’s crucial for businesses to stay up to date with the latest information and consult with us if needed. We are always here to help with any of your payroll needs. Contact Us Here or call us at 772-208-9655!