How Do You Use a Payroll Tax Calculator?


Quick Answer

Use a payroll calculator by inserting relevant information such as filing status, federal W-4 information, state of residence, general paycheck information and pre-tax deductions, according to Paycheck Manager. After all the information is entered, the calculator provides the amounts of federal, state and other taxes to be withheld from an employee's paycheck.

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Full Answer

The first category in the calculator provides drop-down menus for the tax year and the state of residence of the business, shows Paycheck Manager. Once a user enters the state, a new category appears for applicable state and local withholding taxes, which are factored into the total amount. The next category requires information from the employee's W-4 form such as marital status and number of allowances.

In the general paycheck information category, enter the type of pay cycle, pay rate and whether the employee is paid by an hourly wage or a salary, as shown in Paycheck Manager. The application displays two types of deductions. The first deduction category includes non-tax deductions such as health insurance premiums, and the second category is for pre-tax deductions such as contributions to retirement plans. Based on all this information, the application calculates the payroll withholding taxes. If applicable, enter after-tax adjustments to arrive at the final net pay amount for the paycheck.

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