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
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 about Taxes
Employers calculate federal income tax withholding amounts based on information supplied by employees in Forms W-4, while Social Security and Medicare taxes are based on fixed percentages, reports the IRS. Employees are able to estimate withholding amounts for Forms W-4 using an online withholding calculator on the IRS website.Full Answer >
According to the IRS, a taxpayer can write off a portion of his rent if he uses part of his home for business. This area must be designated solely for business and must be the main place of business for the taxpayer's company.Full Answer >
Any taxpayer who has medical expenses in excess of 10 percent of the adjusted gross income for the year may qualify for a medical deduction when filing federal income tax returns, according to TurboTax. To claim the deductions, the taxpayer must itemize deductions rather than taking the standard deduction.Full Answer >
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 >