How is worker Federal Income Tax (FIT) calculated? – Paid

What is Federal Income Tax?

Federal Income Tax (FIT) is levied by the Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other legal entities. Federal income taxes apply to all forms of earnings that make up a taxpayer's taxable income, including wages, salaries, commissions, bonuses, tips, investment income, and certain types of unearned income.

How is Federal Income Tax calculated?

The amount of Federal Tax withheld is calculated based on workers' total income, filing status, and personal exemptions. withholding elections from their W-4 form.

Workers and Employers can review IRS Publication 505 which outlines federal income tax, withholding, and estimated tax.

For assistance on how to complete their W-4 form elections, workers can consult their CPA or tax advisor.

Who pays Federal Income Tax?

Full and part-time W2 employees.