Withholding Federal Income Tax

• When you are hired, one of the employment forms that is required for you to fill out is a W-4. This form tells your employer several things he will need to know to properly withhold federal income taxes from your pay. The W-4 includes your name, address and Social Security number. Federal income tax is calculated based on the number of exemptions you select on your W-4 and how often you are paid by your employer.
  
  

Withholding Social Security Tax

• The Federal Insurance Contributions Act (FICA) was enacted in 1956. Old-age, survivors and disability insurance is financed by the Social Security tax, which is a percentage of your gross wages and your employer also pays a matching percentage.
  
  

Withholding Medicare Tax

• The hospital insurance part of Medicare is financed by the Medicare tax. Your employer withholds it from your paycheck as well. It is a percentage of your gross wages. Again, your employer must match the percentage of the Medicare tax on every dollar you earn.
  
  

Withholding State Income Tax

• Forty-three states obtain revenue through personal income tax. If your state is one of those, then your employer is also required to withhold the state income tax from your paycheck. He will have to report and pay the money on your behalf.
  
  

Reporting And Paying Employer Withheld Taxes

• An employer is required to report and pay any taxes he withheld from your earnings. He is also required to report the amounts to you. Every year, an employer must file a W-2 for every employee that has been on his payroll during the past year. You will receive a copy of your W-2, as will the Internal Revenue Service and your state taxing authority. This W-2 shows the government how much was paid by your employer on your behalf.
  
  While you cannot change the amount of money withheld for Social Security or Medicare, you can file your income tax report and get a refund of any excess federal and state income tax you paid.