Payroll Deductions

After you have calculated an employee’s wages, you will need to perform all of the necessary payroll deductions. You will need to deduct monies for certain taxes and programs, based on an employee’s specific earning amount, marital status, W4 information and other special circumstances. Each payroll period, you will deduct a portion of your employees' earnings to pay their estimated federal income taxes, Social Security taxes, specific state and local taxes, and additional deduction that can include retirement plans, health insurance, flexible spending accounts and disability insurance. You will need to understand whether each deduction should be taken pre-tax or post-tax and how to adjust tax calculations based on that. If you don’t use a payroll service who will handle payroll calculations for you, you will need to become very familiar with the IRS employer’s tax guide to understand all the rules and regulations.