Employers are mandated by law to withhold tax from their employees’ salary. There are a total of three of four type of tax withheld from the employees’ salary. These are federal income tax, Social Security tax, Medicare tax, and state income tax if the state taxes wages. While Social Security and Medicare tax under FICA has a set rate, the federal and state income taxes must be figured out before processing payroll. For federal taxes, this is done using the employees’ Form W-4 and federal tax withholding tables.
The IRS releases the federal withholding tables with other useful information for employers to figure out the tax withholding for every year. Given the tax code slightly changes, the IRS will need to update the Form W-4, thus, the federal tax withholding tables. For the 2021 tax year, we expect the IRS to issue new tax withholding tables in the upcoming months. Check the link down below to see if the IRS released the tax withholding tables.
While federal tax withholding tables is such a great source to determine tax withholdings, it won’t be enough for calculating the taxes withheld. Employers will need the following along with the tax withholding tables to figure out how much tax needs to be withheld.
- Form W-4, Employee’s Withholding Certificate
- Pay frequency
- Employee’s salary
Once an employer has all this information, the tax withholding can be figured out easily without the need for anything in addition. Just follow the guidelines on the federal tax withholding tables and you will see how much tax needs to be withheld. Since there isn’t a requirement that it must be exactly how much the employee owes, withholding at a similar rate is going to be enough.
Besides, most employees enter an extra withholding amount on their W-4 so they do not owe taxes and increase their tax refunds. Get federal withholding tables for 2021 tax year by clicking here.