How to Calculate IRS Individual Federal Withholding
- 1). Consult the most recent version of IRS publication 15, also known as Circular E, to find the value of each allowance claimed on the employee's W-4 form based on how often paychecks are issued. For example, if employees are paid semimonthly, each allowance would be worth $85.42.
If the employee claims no allowances, skip to step 4. - 2). Multiply the value of each allowance by the number of allowances claimed on the employee's W-4 form. Continuing the example, if an employee claims two allowances, you would multiply $85.42 by 2 to get $170.84.
- 3). Subtract the amount of the allowances from step 2 from the employee's paycheck to find the amount of income subject to IRS income tax withholding. In this example, if an employee earns $3,300, subtract $170.84 from $3,300 to get $3,129.16.
- 4). Use the appropriate tax withholding tables from the most recent IRS Publication 15 to calculate how much money must be withheld for individual federal income tax withholding. In this example, if the employee was single the paycheck would have $591.35 withheld for IRS income taxes.
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