Feb
Payroll Accounting Options
This calculation is normally done weekly, bi-weekly, or monthly. Before the actual check is issued to the worker, there are other procedures that are required of the employer.
Taxes and other withholdings are retained from the paycheck before it is given to the employee. After the money is taken from the gross earnings, the employee is left with the net income or take-home pay. The percentages, income brackets, and formulas of the Internal Revenue Service change periodically. For example, in the 1970′s the highest Federal income bracket was at a socialistic 70% of the gross income.
The items withheld from a paycheck are Medicare, Social Security, Federal, and State taxes. The current Medicare tax rate is set at 1.45% and the Social Security rate is 6.2% of gross earnings. Federal income taxes range from 10% to 35% depending on the income bracket the individual falls into. The State taxes vary by each state with 7 states not imposing income tax. To view each state law search: tax admin fta rate ind inc.