Employees are responsible for paying several types of payroll taxes, which are automatically withheld from their paychecks by Atto Payroll.
Breakdown of Employee-Paid Taxes:
Social Security Tax (SS)
Collected under FICA (Federal Insurance Contributions Act), this tax helps fund the U.S. Social Security program, which provides retirement and disability benefits. A set percentage of the employee’s earnings is withheld, with an equal match paid by the employer.
Medicare Tax (MED)
Also part of FICA, the Medicare tax funds the federal health insurance program for individuals aged 65 or older. Both the employee and employer contribute equal shares of the total required amount.
Federal Income Tax (FIT)
Withheld based on the employee’s income, filing status, and W-4 form details. This tax goes to the IRS and supports various federal programs.
State Income Tax
If applicable in the employee’s state of residence or employment, this tax is withheld based on local rules and W-4 state-specific equivalents.
Local Income Tax
In some cities or counties, employees may also be subject to local taxes. These are automatically calculated and withheld based on the location of work and/or residence.
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