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:
John Doe is an employee working in California who has been paid monthly and whose filing status is single. There are no allowances claimed on his Form W-4.
Consider the gross pay for the monthly pay period is $1,000. Then, the tax calculation follows:
| Gross Pay | 1000.00 |
| Federal tax | 0.00 |
| FICA taxes | 62.00 |
| Medicare | 14.50 |
| State tax | 0.00 |
| SDI | 10.00 |
| Net Pay | 913.50 |
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.