What Is The Difference In Between Federal Income Tax and Federal Payroll Tax?

Answer by  rainbow122 (61)

Federal income tax is the amount owed based on income from all sources (employment, winnings, bank interest, etc. ) Federal payroll tax only refers to the amount deducted from your paychecks by your employer. It's a percentage of what you earned determined according to how many dependents you claimed.

Answer by  joantheresa (1421)

Federal income tax is the tax individuals pay on the income and wages they earned during the year. Federal payroll tax is a tax employers pay on the wages of their employees, plus the withholding they take out of the employee's check each pay period.

Answer by  dertr (147)

The federal income tax applies to income above a certain threshold. Federal payroll taxes are used to fund social security and medicare programs, and are applied to the entire income.