The Internal Revenue Service describes federal income tax as a "pay as you go" tax. Earn the money, and pay the tax. Most people have federal taxes withheld from their pay by their employer. Federal taxes deducted from your paycheck fall into two categories. The first is the withholding tax, which is based on your earnings. The second set falls under the Federal Insurance Contributions Act, which covers Social Security and Medicare contributions.
Federal Withholding Tax
The amount of your federal withholding tax is based on your earnings and the information you gave your employer when you submitted your Form W-4. That included your marital status as single employees have more money withheld than married workers. It also included the number of withholding allowances you wanted to claim. You will need to submit a new form W-4 to change your marital status or allowance numbers.
Federal Insurance Contributions Act
As of 2015, FICA taxes for Social Security take 6.2 percent of your salary up to $118,500. Your employer pays another 6.2 percent on your behalf. For Medicare, you both pay 1.4 percent no matter how much you make. If you earn more than $200,000 in a year, your employer must withhold an additional 0.9 percent for the "additional Medicare tax."
- IRS.gov: Tax Withholding
- IRS.gov: Topic 751 - Social Security and Medicare Withholding Rates
- IRS. "FAQs on the 2020 Form W-4." Accessed Oct. 16, 2020.
- IRS. "Tax Withholding for Individuals." Accessed Oct. 16, 2020.
- IRS. "Topic No. 753 Form W-4—Employee's Withholding Allowance Certificate." Accessed Oct. 16, 2020.
- Social Security Administration. "Fact Sheet Social Security." Accessed Oct. 16, 2020.
- Social Security Administration. "Contribution And Benefit Base." Accessed Oct. 16, 2020.
- IRS. "Topic No. 608 Excess Social Security and RRTA Tax Withheld." Accessed Oct. 16, 2020.
- IRS. "Publication 531 (2019), Reporting Tip Income." Accessed Oct. 16, 2020.
- IRS. "Group-Term Life Insurance." Accessed Oct. 16, 2020.
- IRS. "Questions and Answers for the Additional Medicare Tax." Accessed Oct. 16, 2020.
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including Sapling, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.