The document discusses various payroll deductions including: - Federal income tax withholding which is determined using Form W-4 and IRS withholding tables. - Social Security (FICA) tax of 6.2% and Medicare tax of 1.45% are withheld from employee wages. - Missouri state income tax ranges from 1.5% to 6% depending on taxable income bracket. - Examples are provided to calculate taxes withheld for federal income tax, Social Security, Medicare, and state income tax for different income amounts.

1. 2.1 Deductions September 27, 2012
Objective: calculate total deductions and net pay
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2. 2.1 Deductions September 27, 2012
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3. 2.1 Deductions September 27, 2012
2.1 Federal Withholding Tax Deduction
Deductions: subtractions from gross pay
Withholding taxes: income taxes deduction
Withholding allowance: reduces amount withheld
http://www.irs.gov/app/understandingTaxes/student/hows_mod01.jsp
Payroll and income taxes are withheld from employees' pay by their employers.
Employers send withheld taxes to the federal government.
Payroll taxes include Social Security (FICA) tax rate is 6.2% and Medicare tax rate is 1.45%.
Employees complete Form W­4 which tells the employer how much income tax to withhold.
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4. 2.1 Deductions September 27, 2012
To figure Missouri State Income Tax, use the following chart:
The tax table below will show in detail the Missouri state income tax rates by income tax bracket(s).
There are 10 income tax brackets for Missouri.
If your income range is between $0 and $1,000, your tax rate on every dollar of income earned is 1.5%.
If your income range is between $1,001 and $2,000, your tax rate on every dollar of income earned is 2%.
If your income range is between $2,001 and $3,000, your tax rate on every dollar of income earned is 2.5%.
If your income range is between $3,001 and $4,000, your tax rate on every dollar of income earned is 3%.
If your income range is between $4,001 and $5,000, your tax rate on every dollar of income earned is 3.5%.
If your income range is between $5,001 and $6,000, your tax rate on every dollar of income earned is 4%.
If your income range is between $6,001 and $7,000, your tax rate on every dollar of income earned is 4.5%.
If your income range is between $7,001 and $8,000, your tax rate on every dollar of income earned is 5%.
If your income range is between $8,001 and $9,000, your tax rate on every dollar of income earned is 5.5%.
If your income range is $9,001 and over, your tax rate on every dollar of income earned is 6%
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5. 2.1 Deductions September 27, 2012
A single receptionist's weekly wages are $380 with 1 withholding allowance.
What federal income tax is withheld?
(look at the chart !)
What state income tax is withheld? (multiply by the rate )
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6. 2.1 Deductions September 27, 2012
Federal Insurance Contributions Act (FICA)
benefits include disability, medicare, retirement and survivors
Multiply
Find the Social Security, Medicare, and total FICA tax for the following incomes.
$35,000
$80,000
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7. 2.1 Deductions September 27, 2012
Find the medicare, social security, federal, and state taxes withheld. Then find the net pay.
You earn $843 this week at your job.
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8. 2.1 Deductions September 27, 2012
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