Determining Payroll Deductions
Upon completion of this unit, you should be able to:
List the four factors that are used in determining deductions from the federal income tax wage-bracket tables.
Name several common "pretax" items that lessen the amount of income tax for employees.
Use federal and state wage-bracket tables to determine income taxes due on employee earnings.
Calculate social security and Medicare taxes on employee earnings.
Compute the earnings from tips of an employee, and explain how taxes on these earnings are recorded.
Subtract total deductions from gross earnings to determine net pay.
Explain why it is important to use the correct wage-bracket tax tables to determine both federal and state income tax on employee earnings.
State the current rates on employee earnings for social security tax and Medicare tax.
Explain what state disability and state unemployment taxes are, including who pays these taxes and who benefits from them.
Define each of these terms as they relate to deductions from employee earnings: voluntary deductions, garnishment of wages, union checkoff, retirement accounts, pension plans, savings plans, and charitable contributions.