Tax Articles
Tax articles on federal and state withholding, filing status and how taxes affect your take-home pay.
Understanding Payroll Taxes
Federal income tax, Social Security, Medicare and any state or local tax are all withheld before a paycheck is issued. How much comes out depends on earnings, pay frequency, filing status and the elections made on Form W-4, which is why two people with the same salary can take home noticeably different amounts.
Withholding questions usually surface in one of two places: on the stub itself, or at filing time. If the amount withheld looks wrong, why no federal income tax was withheld walks through the legitimate reasons and the payroll errors. If the year-end numbers look wrong, the W-2 box-by-box guide explains why Box 1 is normally lower than the final year-to-date gross on your last stub.
Some payroll taxes never touch the employee's check at all. The federal unemployment tax is paid entirely by the employer. The guide to what FUTA is and how the $7,000 wage base works covers the rate, Form 940 and the rare cases where it is printed on a stub.
For the tax lines as they appear on a stub see Paystubs and Paycheck. For contractor income that has no withholding at all, see 1099 Forms.
What Is FUTA? Federal Unemployment Tax Explained
FUTA is a federal unemployment tax only employers pay: 6.0% on the first $7,000 of wages, usually 0.6% after the state credit. Rates, Form 940 and paystubs.
