 In this discussion, we will discuss the discussion question of, describe employee payroll tax withholdings. So when discussing payroll tax withholdings, we're talking about that stuff that's going to be pulled from the employee's paychecks in order to arrive at net pay. So we can go through the calculation for the payroll tax withholding and list the types of things that will be withheld for payroll taxes. So the types of things that will be withheld are the federal taxes typically are what we would focus in on, which includes FIT, federal income tax, social security, and Medicare. Those are going to be the major withholdings that we will have for federal taxes. The FIT is federal income tax. That's you need to keep that separate from the employee's federal income tax, meaning this is not the tax that the employee, the employer's federal income tax, meaning this is not the tax that the employer is paying on net income at the end of the year. It's the tax that is the responsibility of the employee. It's the employer's responsibility, however, to make sure that withholdings have been made. So it's a little bit unusual type of situation. Remember that these types of taxes are withholding taxes, which are taxes on the employee taxes that will be in this case, federal income tax reported on the 1040 at the end of the year, meaning the employee has responsible responsibility for self-reporting taxes and paying them. However, the employer has the responsibility of withholding a certain amount of taxes based on the requirements given. So that's going to be the employer then will withhold the federal income tax based on what is on mainly the W-4 form when the employee fills out the W-4. And that's going to include, we're going to have to withhold based on marital status, income level, and the pay periods when we think about a pay period by period withholding. So by far, the federal income tax withholding is the most complex of the withholdings to calculate then because of those factors that we're going to need. So to calculate the federal income tax withholding, we would need, like we say the marital status, we would need the amount and we would need the number of allowances. Then we can look at the tables. If we go to tables that would be provided by the IRS and the circular E, then we can find the amount that would be withheld based on the tables. If many times the reason would be if employees have too high of wages to look up in the table, then we could use a percentage method to find the FIT federal income tax. Then we have Medicare and Social Security. The Social Security is going to be a tax that has a cap on it. So usually that's about 6.2% of wages. Wages could differ from total wages if, for example, they would go down by something like a cafeteria plan. So it might be less than total earnings given a cafeteria plan. And the FIT wages, by the way, would be less than total earnings by possibly a cafeteria plan and a 401K plan if they had those options. So the Social Security then could be less by a cafeteria plan than total wages, the wages we use to calculate Social Security. And there's also a cap on it which will go up from year to year. It's a fairly high cap, so only the higher earners, over 100,000, so the higher earners would be the individuals that would hit that cap, otherwise they wouldn't hit the cap and it wouldn't be a problem. So 6.2% typically is what would then be withheld. It's a flat tax, more of a flat tax, up to that cap, which means it's easy to calculate. We're not going to be looking at these tables to calculate the tax. We just have to take the Social Security wages, multiply times the Social Security rate of 6.2 currently. Note that there is an Employer Portion and Employee Portion of Social Security, so we don't want to get that mixed up. We're only doing half of it here and the employer would then have to match the other half. Then we have Medicare, which if we look at Medicare wages, they're pretty similar to total wages, could go down by something like a cafeteria plan, however. But there is no cap on Medicare wages. And we're going to multiply Medicare wages times the percent for the Employee Portion, which is 0.0145, 1.45% at this time. Note that there is an Employer Portion of Medicare as well, so there is a matching type of concept with Medicare as well. These withholdings then would be withheld from the paychecks, so we would calculate gross pay for paychecks by having the gross pay, we would calculate net pay by starting with gross pay, subtracting out the withholdings, FIT, Social Security, Medicare as part of the withholdings to get to the net paycheck. Note that these withholdings will come into play, at least the federal income tax comes into play when we record our year-end taxes for the employees, meaning the withholdings will be on the 1040, and if we withheld more than the taxes we owe, then we would get a refund. The withholdings would also be reported on the W-2s, and we would also have to report them in some ways on the 941s to quarterly tax returns.