Payroll Tax Deduction For Employee

Employers are required by law to withhold federal payroll taxes from their employees’ paychecks. If the employee meets the Internal Revenue Service’s qualifications for exempt status, then he can claim “exempt,” in which no federal income tax is withheld. A number of steps are involved in calculating federal payroll taxes owed.

Form W-4 for Federal Income Tax Owed

The employer refers to the employee's W-4 form to help figure out his federal income tax withholding. It uses the W-4 corresponding to the tax year being figured. The two most critical data needed from the W-4 are the filing status and the number of allowances.