WITHHOLDING TAXES
Withholding tax is an amount withheld by the party making payment to another (payee) and paid to the taxation authorities. The amount the payer deducts may vary, depending on the nature of the product or service being paid for. The payee is assessed on the gross amount, and the tax to be withheld (the withholding tax) is computed in that assessment.
In most jurisdictions, employers are required to deduct tax from salary. Employers are required to withhold a portion of each employee's income and pay it directly to the Internal Revenue Service . This withholding acts as a prepayment of tax they will owe at the end of the year, as well as a direct payment of certain other taxes.
The amount of a person's federal income tax withholding depends on several factors such as:
- the taxpayer's marital status.
- the number of children or dependents the taxpayer has.
- whether or not he is an employee
- if the taxpayer wants to claim child tax credits .
- if the taxpayer holds two or more jobs.
- if the taxpayer plans to itemize .
- any tax exemptions from withholding that the taxpayer wants to claim.
- any additional amount the taxpayer wants to withhold.
Once you are set up, just tell us how many hours each employee worked. We will calculate your payroll, including the deductions and withholdings for all relevant tax jurisdictions.
