What are the different Federal withholdings?
A. Federal Withholding taxes – These are taxes paid by the employee and are calculated on individual employee data (wages, marital status, exemptions and frequency of payroll). Commonly used tax tables are listed in the IRS Employer’s Tax Guide (Circular E). Social Security and Medicare taxes (Federal Insurance Contributions Act or FICA) – Taxes are paid by the employee with matching contributions paid by the employer. For 2001, Social Security tax is 6.2% (0.062) on the first $80,400 of each employee’s gross wages; Medicare tax is 1.45% (0.0145) of each employee’s gross wages. There is no wage limit, and the employee and employer each contribute at these rates. Federal unemployment taxes (FUTA – Federal Unemployment Tax Act) – Taxes paid by the employer only is calculated at the rate of 6.2% (0.062) on the first $7,000 of gross wages paid to each employee. In figuring your FUTA tax, you can deduct a credit of up to 5.4% (0.054) for state unemployment taxes paid resulting in a net fede
