What is my payroll number

what is my payroll number

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Federal Income Tax

Federal income taxes are paid on all "earned income" and, although withheld by your employer and remitted on your behalf, are not paid by your employer. The taxes are deducted from your wages and earnings. You also are liable for taxes on other income, such as (some) Social Security benefits and unemployment payments, but these taxes are not "withheld" in the manner that taxes are deducted from your paycheck. You simply must report such income when you file your taxes and pay any amount owed. Your federal tax amount is unfixed, meaning that you pay a larger percentage of your income as you earn more (up to a 35 percent limit for those making $379,150 or more in 2011).

Social Security Tax

Social security taxes, paid along with Medicare taxes and withheld under the "FICA" banner on your paycheck and W-2 form, are a form of payroll taxes. They constitute a contribution to the "Old-Age and Survivors Insurance Trust Fund," which was established in 1940 as an amendment to the Social Security Act of 1935. A fixed percentage of funds received through FICA (and the Self-Employment Contributions Act for self-employed people) is deposited into the Social Security fund every business day. Funds not used for current payments to Social Security recipients are invested in interest-bearing federal securities instruments (by law). The percentage withheld is

changed from time to time along with the maximum gross income on which it is calculated. Normally, your employer matches your contributions, however, for the 2011 tax year, the employer payment remained at 6.20 percent of pay up to $106,800, while the employee portion was cut to 4.20 percent on the same maximum.

Medicare Tax

Medicare is included in your FICA withholding. As of 2011, Medicare withholding remained at a rate of 1.45 percent of your gross wages up to the same limit as Social Security, which your employer matches. The combined percentage figure for Medicare and Social Security represents a "capped" or fixed tax rate, unlike the uncapped or unlimited nature of the federal income taxes you pay.

Other Payroll Taxes

The federal government, under the Federal Unemployment Tax Act (FUTA), also requires employers to pay unemployment taxes to fund state unemployment benefit coffers. As or 2011, taxes are paid on the first $7,000 of each employee's wages for a given calendar year. While the FUTA rate is 6.2 percent, the effective rate really is only 0.8 percent if employers adhere to state unemployment contribution laws, thus receiving a 5.4 percent credit allowed by the federal government. State unemployment rates vary and are based on a business's size, location, nature and number of employees. Many states, and some municipalities, also levy income taxes that are withheld from an employee's pay.

Source: ehow.com

Category: Bank

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