How Do You Calculate Federal Withholding?


Quick Answer

Federal withholding is calculated using the W-4 questions answered by the taxpayer, as stated by the IRS. The number of allowances claimed on this form determines how much is withheld from each pay check. The IRS references tables that account for family size, income and filing status.

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Full Answer

Using tax tables, taxpayers may estimate the total federal withholding for that particular tax year, the IRS reports. Taxes are withheld at a higher rate for employees with a higher household income. Tax brackets are not based on individual income, and withhold based entirely on the number of allowances claimed and the income of the taxpayer. Taxpayers should be careful to choose the correct number of allowances to avoid owing too much when filing federal tax returns.

Depending on income, family size and filing status, a certain amount of income is not taxed. This protects basic living expenses. Taxes are assessed based on a percentage of income above this amount and added to a base tax for that bracket. The final total represents what the tax payer owes the IRS. Other monies are withheld from pay to cover the Social Security and Medicare taxes. These amounts are fixed percentages that phase-out and become a fixed amount above certain income levels determined each year by the IRS.

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