Gross pay is what you make for the hours you
Netpay is what is left after the withholding
of deductions (such as health insurance or
wage garnishments) and taxes owed by the
Life nsurance for self, spouse, or children
Long-Term Disability Insurance
Formwith many columns that contains and
summarizes payroll information (amount of
money paid to employees less deductions)
Information includes employee's name, regular
hours, sick hours, overtime hours, federal income
taxes withheld, medical insurance deductions,
union dues, gross pay, and net pay
Itis important because it keeps a record of a
person’s employment career
Step 1: Determine if you are required to pay FICA tax. Any person who is in a
standard employee/employer relationship is required to pay tax on all taxable
income. Anyone completing work which is considered employment under FICA law or
receives funds as compensation for time spent are also required to pay FICA taxes
Step 2: Calculate your total taxable income for the pay period. This includes all
earning as part of an employee/employer relationship, such as tips, commissions,
overtime, piecework earnings and any taxable benefits. Deduct any heath and
dental premiums from this amount, as they are non-taxable.
Step 3: Look up the current percentage taxation rate for OASDI and the Medicare or
Hospital Insurance Program. These rates are updated and maintained by the Internal
Revenue Service, complete with instructions on the method used to calculate the
amounts to be deducted from your pay.
Step 4: Multiply the current percentage tax rate against the taxable earnings for the
period for both OASDI and Medicare or HI to calculate the amount of the deduction.
The rates and limits differ between the two programs, although they are combined
in the FICA tax amount
Compare the amounts deducted from your payroll statement against your
calculation to ensure that the correct limits and percentages are used
0.8% of the first $7,000 paid to each
employee each year. This means you pay $56
if you have one employee who works all year
for $70,000 or $560 if you have 10 employees
who earn $7,000 each. You get the same kind
of hit only worse from state unemployment
tax if you churn employees
SocialSecurity and Medicare taxes that were
to be withheld plus your company’s matching
of those taxes
Step 1:Determine whether you have to file a federal income tax return. If your income is low, you may not
have to file. But even children have to file if they meet certain income levels or have certain types of
Step 2: Find out what filing status you qualify for. In some circumstances you have a choice of filing
statuses. Some filing statuses are better than others.
Step 3: Determine how many personal and dependent exemptions you have. Personal exemptions are for
yourself and your spouse. Anyone can be your dependent if he or she qualifies.
Step 4: Calculate your income. Many types of money you receive can be taxable income, but some types
Step 5: Calculate your income adjustments. You are allowed to subtract some things from your income and
lower your taxes.
Step 6: Calculate your deductions. You can choose between a standard deduction and itemized deductions.
Deductions lower the amount of your income that is subject to taxes.
Step 7: Determine your income tax. Taxable income minus adjustments, minus deductions, and minus
exemptions equals the income on which you are taxed. Tax tables or schedules will tell you how much your
income tax is.
Step 8: Determine your credits. You can get credits against your income tax for certain situations or
Step 9: Determine your additional taxes. In some circumstances - for example, if you are self-employed -
you may have to pay additional taxes.
Step 10: Find out your total payments. This includes taxes withheld by your employer, estimated tax
payments you made, and the earned income credit. The total is how much you have paid or has been paid
Step 11: Find out the amount you have overpaid or underpaid. This will be your refund or the amount of
tax you still have to pay. You could have a penalty for underpaying your taxes, but only if you were off by
a significant amount.
Step 12: Get the right tax forms and fill them out