Online tax withholding calculator 2021 is based on an excel spreadsheet named Income Tax Withholding Assistant to help small employers compute the amount of federal income tax to withhold from their employees’ wages. This excel spreadsheet is published on IRS website .Further, the spreadsheet is designed to help employers for the transition to the new Form W-4 for 2020.
Online Income Tax Withholding Calculator
We earlier created a paycheck tax withholding calculator .But this time, the withholding calculator is for employers and is based entirely on the Income Tax Withholding Assistant spreadsheet published by IRS.
Before you start using the tax withholding calculator, make sure that you have a completed Form W-4 from your employee. The tax withholding calculator can accommodate both the 2020 Form W-4 and Forms W-4 from prior years. Just, fill up the input fields , and the amount of tax to be withheld will be computed automatically.
Who should use online tax withholding calculator?
An employer has the legal responsibility to withhold tax from their employee’s remuneration and deposit it to the IRS on their behalf. Once the wages paid after tax deduction, the amount of net salary/wages are reflected on the Form W-2, Wage and Tax Statement, the employee receives at the end of the year. Many other types of payers of income require backup withholding!
If you determine your employees’ income tax withholding by following Publication 15-T .then you should use this tax calculator. However, if you use an automated payroll system for your business, you do not need to use this calculator or irs tax withholding assistant.
How withholding of tax on wages or salary is determined ?
The amount of tax deduction at source from the wages depends on the amount of income earned and certain types of information an employee gives to their employer on Form W–4, Employee’s Withholding Allowance Certificate:
- His filing status
- How many withholding allowances claimed by the taxpayer.
- If employee requested any additional withholding from his/her wages.