You're probably aware that you forfeit a certain amount of your paycheck each week as a result of "withholding ." The federal government withholds several different types of taxes from its working citizens' paychecks. These include Social Security. Medicare and standard income taxes. Your state government may withhold additional income taxes as well as certain other miscellaneous levies. Finally, your municipality or county may withhold a small portion of your paycheck for local income taxes. Many counties and municipalities levy "special" income taxes to pay for such capital improvement projects as stadiums and public transportation lines.
Most earners don't pay attention to the precise amount that these various entities withhold from their paychecks. The sting of withholding is made slightly more palatable by the fact that many workers receive sizable federal income tax refunds once they've filed their taxes each year. This is because the federal government tends to overestimate the amount of income taxes that it must withhold from each weekly paycheck.
The means by which the Internal Revenue Service calculates withholding amounts is complex: It involves using workers' weekly earnings to estimate the total amount that they'll earn over the course of an entire year. In many cases, this method overestimates workers' annual earnings. In addition,
taxpayers can claim a dizzying array of tax deductions. credits and other allowances that may reduce their total tax burden. The vast majority of American taxpayers take advantage of this generous system of back-loaded reimbursement.
If you're curious to learn exactly how much money the IRS withholds from each of your paychecks, you have several options. First, you could look at your most recent pay stub. These documents are required to provide a withholding breakdown for each distinct type of tax. If you look at your stub, you'll be able to determine the amount that the government withheld from your check to cover Social Security, Medicare and income taxes. Your stub will also clearly note the cumulative amount that has been withheld from your pay over the course of the current tax year.
If you don't have access to your pay stub, you can use an online tax calculator to estimate your year-to-date tax burden. The IRS provides one such calculator on its website. Using your hourly or weekly earnings, these powerful algorithms can determine the precise amount that's withheld from your paycheck each week. Since withholding rates may change from year to year, you should ensure that any tax calculator that you use has been properly updated.