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How is federal income tax calculated?
How is federal income tax calculated?
How federal is determined and why it might change per payroll.
Nina avatar
Written by Nina
Updated over a week ago

1) Federal income tax is determined based on the employee's W-4. In the employee profile, the "Federal taxes" tab asks you to enter the employee's W-4 answers. Inputs like marital status and dependents $ amount impacts how much tax is taken out.
Further reading: What is my employee's dependents amount?

2) For each payroll federal tax is calculated based on the gross pay and YTD value (income brackets).

Why is my employee's federal income $0?

The federal income tax might result in 0 if the calculation's results in an annual gross pay that is below the standard deduction.

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