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Finding Federal Withholding Percentage

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Money Talk > Taxes

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adian
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Finding Federal Withholding Percentage  Reply with quote  

Hello,
I have to admit that as far as taxes and personal finance in general goes, I'm really green. I've finally got a decent job and am looking to move out of my parents' home into a place of my own. To do this, I need to find out approximately how much of my bi-weekly paycheck I'm actually taking home.

I've been able to reverse engineer most of the taxes taken out of my paycheck to a percent (I'm hourly, so finding fixed amounts won't help me), but the Federal Withholding seems to change depending on the amount of my pay.

Now, I know that there's a fair bit that goes into finding this - tax bracket, marital status, dependants - and I'm not looking for anyone to do it for me. I'm just trying to get a push in the right direction, maybe have a fairly basic explanation of what exactly is going on. I've had some people point me to literature on the IRS's website but I couldn't make heads or tails of it - I couldn't even really find the relevant information.

Anyway, any help with this would be greatly appreciated. I know it's something that's fairly complicated, but if I can get even a little light shed on the subject it'll help.

- Pat
Post Fri Feb 10, 2006 2:54 pm
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coaster
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The withholding is calculated to roughly approximate what the federal taxes will be on your next tax return, so that you don't have either a big refund or a big tax due. If your income varies from week to week, the percent of witholding will probably vary if your income on an annualized basis is shifting back and forth from one tax bracket to another.

As moneypenny suggested, you can fill out a 1040EZ to get a rough idea of what your taxes will be next year and then see if your withholding is pretty close to your annual taxes. If it's too much, you can file an extra exemption or more with your employer so that less will be withheld. The easiest way to "what-if" tax returns is with a tax preparation program such as Turbo Tax.

Remember that there's actually three different taxes withheld from your paycheck: income tax, Social Security tax, and Medicare tax. You only want to do your calculations on the income tax portion of the withholding.

~Tim~
Post Fri Feb 10, 2006 10:59 pm
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efflandt
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This can give you an idea of federal tax and marginal tax bracket for annual income http://www.irs.gov/formspubs/article/0,,id=150856,00.html

Or to see what withholding would typically be per paycheck read through http://www.irs.gov/pub/irs-pdf/p15.pdf especially the part beginning on page 34 and tables that follow for different pay periods and exemptions.

For my January bonus, I do not know what time period was used for withholding. Taxes and 401k contribution sucked up half of it.
Post Sat Feb 11, 2006 1:18 am
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