It’s important that you get to know payroll taxes and how they impact your earnings. Payroll taxes must be withheld from an employee’s paycheck by law, and every worker in the USA is subject to payroll taxes.
What taxes are taken out of my payroll?
There are specific taxes that make up the deductions that are taken out of your payroll. Everyone has to pay these taxes, but it’s good to know where this money is going. Part of the deduction is Income Tax, which is the tax that the government imposes on employees. Lower income earners will generally pay less tax than higher income earners. Your tax contribution goes towards things like national defense, healthcare, education, natural resources, and science.
Another part of the deduction is Social Security and Medicare, which you will become eligible for when you retire or reach a certain age. Although taxes are an annoyance, the whole country relies on them to make sure things like public services, education, and the government function properly, and to secure our future when we retire.
All employed people in the United States will receive a W-2 form by January 31st of the following year of your employment. A W-2 tax form is what your employer must send to the Inland Revenue Service (IRS) at the end of the year to report your annual wages and how much tax has been taken off your salary. Employers must file certain paperwork for each worker to calculate taxes the W-2 included.
Your employer will send you a W-2 form before the end of January of the following year. The form includes different sections, including a list of all taxes taken from your paycheck. It’s really important to have your W-2 when preparing your tax return, and to return it before the deadline.
Even if you don’t work for your employer for the entire year, you will still get a W-2 form.