Federal income tax

Federal income tax is withheld in its entirety from the employee's gross wages. Unlike the Federal unemployment tax (FUTA), which the employer pays in full, the employer does not match or pay for this tax.

The amount of the tax is determined through either a mathematical calculation or through the use of a set table. In determining an employee's withholding, an employer must maintain a current W-4 for their employees, showing the number of allowances, marital status and additional withholding requests.

This tax is also reported quarterly on Form 941 along with the FICA tax.