Tax Details

Here's a breakdown of how each type of tax affects you and your employees.

Realm Payroll, along with Symmetry Software, calculates payroll withholding taxes for federal, FICA, state, and local taxes. Here's a breakdown of how each type of tax affects you and your employees. Only taxable jobs and adjustments will be used to calculate taxes.

Tax Information

  • Federal— This tax is imposed on your employees' annual earnings by the United States Internal Revenue Service (IRS). You will go by your employees' Form W-4 Withholding Certificate when withholding federal income tax.
  • State— This tax is imposed on your employees' annual earnings by the department of revenue. Some states don't have state income tax so none will be withheld. For those that do, you will go by your employees' Form W-4 Withholding Certificate when withholding state income tax. Refer to your state's department of revenue website for more information.
  • Local— This tax is imposed on your employees' annual earnings by a state, county, or municipality based on your employees' addresses. Refer to your state's department of revenue website for more information on local tax rates.
  • FICA— The Federal Insurance Contribution Act (FICA) requires a deduction from employees' paychecks as well as a matching contribution from employers to fund Social Security and Medicare.
  • FUTA— If an employee loses his or her job, the Federal Unemployment Tax Act (FUTA) ensures they receive unemployment payments. This is not deducted from an employee's wages.
  • SUTA— Similar to FUTA, if an employee loses his or her job, the State Unemployment Tax Act (SUTA) ensures they receive unemployment payments. As a state tax, this differs from state to state. Again, this is not deducted from an employee's wages.

Ministerial Tax Information

A minister has a dual tax status. While the minister is self-employed for social security taxes, he or she is still considered an employee for income taxes. Only the voluntary withholding amount on their W-4 is withheld for income taxes.

Any federal and state taxed jobs and adjustments will display in Box 1 and Box 16 of their W-2. Nothing will display from Box 3 to Box 7.

If you need more information on ministerial taxes, read Publication 517.