Why am I getting $0 as federal and state tax?
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Last modified 8/13/2020 12:21:31 AM EST
The chances of you getting $0 as federal and state taxes may depend on the following reasons:
- Taxes are applicable only when earnings crosses a particular threshold
- More dependents may have been claimed for a low salaried employee
Here's an example:
Consider the gross pay for the monthly pay period is $1,000. Then, the tax calculation follows:
As you can see since the earnings are low for this employee, federal and state taxes are not applicable. Earnings exceeding a certain threshold will only subject to taxes.