Q:

What taxes are taken out if you claim exempt?

A:

A taxpayer who claims exempt on a W-4 form turned into an employer has Social Security and Medicare taxes taken out of a regular paycheck, according to the Internal Revenue Service. As of 2014, the Social Security tax rate is 6.2 percent and Medicare tax rate is 1.45 percent.

Know More

Full Answer

An employee who claims exempt on income tax withholding has 7.65 percent of his income withheld for tax purposes, but none of the federal income taxes a person normally pays, explains the IRS. For a $500 paycheck, $38.25 is taken out by the employer to pay Social Security and Medicare taxes. The highest withholding rate for a paycheck is for a taxpayer who is single with no allowances for dependents.

A W-4 form is filled out when a taxpayer first works for a company. The withheld amount may change based on an employee's status, and the withheld amount may change even if the employee still works for the same company. Circumstances that may change withheld amounts include divorce and an event that changes the number of allowances, states the IRS. Each allowance reduces the amount of income tax withheld on each check. Taxpayers may change their withholding amount at any time, and the withheld amount is taken into account when taxpayers file annual income tax returns.

Learn more in Taxes
Sources:

Related Questions

  • Q:

    Can I file as exempt on my W-4 form?

    A:

    Individuals may be able to mark Form W-4 as "exempt" under certain circumstances, according to the Internal Revenue Service. The taxpayer has to have had a refund of all income tax withheld the previous year and has to reasonably expect a full refund of all current year withholding.

    Full Answer >
    Filed Under:
  • Q:

    What happens if you file your taxes late?

    A:

    If taxes are filed after the due date, or not paid in full by then, a failure-to-file penalty can be applied by the Internal Revenue Service. Under special circumstances, a six-month extension may be granted. Additionally, if taxes are filed late, loan approvals may be delayed and tax refunds withheld.

    Full Answer >
    Filed Under:
  • Q:

    How can you appeal taxes?

    A:

    To appeal a tax liability, a person should consider the relevant tax and then file a written protest, notes the Internal Revenue Service. In addition, a written Power of Attorney must be filed if a lawyer, certified public account or enrolled agent is assisting with the case.

    Full Answer >
    Filed Under:
  • Q:

    How do you file back taxes?

    A:

    Back taxes should be filed in the same way and place as on-time returns, states the Internal Revenue Service. However, if the taxpayer has already received a past due notice, he should send the late returns to the location specified in the notice.

    Full Answer >
    Filed Under:

Explore