Federal Tax Withholding for Employees

How can employees set up their federal tax withholding information?

Purpose: This help guide will show you and your employee's how to set up their federal tax withholding information on the Pay Info tab in BambooHR and sync it to payroll.

Federal Tax Withholding

If you're an Account Owner, Full Admin user, or Payroll Admin user and want to enable access for your employees to view or edit their own state tax information, click here to learn more!

Locate the Pay Info tab on the employee profile and find the Federal Tax Withholding section under Taxes (next to Direct Deposit).

1. You will see a view-only field for Employee Tax Type at the top of the Taxes tab. If you have access to update the tax type, go to the Employment Status table on the Job tab. For more information on employee tax types, visit this help guide. 

2. Employees and users with access can add and edit federal tax withholding information. The withholding information includes:

  • Does federal tax withholdings apply to this employee?
    • Yes
    • No, employee is federal tax-exempt (this is uncommon)
  • Filing Status: Step 1(c) of W-4 Form
    • Single or Married Filing Separately
    • Married Filing Jointly
    • Head of Household
  • Work two jobs or spouse works? Step 2 of W-4 Form
  • Dependents Amount: Step 3 of W-4 Form
  • Other Income: Step 4(a) of W-4 Form
  • Deductions Amount: Step 4(b) of W-4 Form
  • Extra Withholding amount:Step 4(c) of W-4 Form
    • Extra Withholding type: $ or % 

If the Federal Tax Withholding Filing Status and Exemption Options are incomplete, the employee's filing status sets to Single (zero).

3. The Full Admin and Payroll Admin user(s) will have access to an additional two fields within the Federal Tax Withholding section:

  • FICA Exempt: Check this box* to have no Social Security or Medicare taxes deducted or reported. This will not display for employee's as this is an employer-only tax type. 
  • FUTA Exempt: Check this box* to have no federal unemployment taxes deducted or reported. This will display for employee's with View Only access. 

*It is your responsibility to understand what would qualify an individual or company from being exempt from these taxes.

BambooHR Payroll will take a few actions to ensure accurate federal withholdings for your employees. We will automatically halt employees' Social Security contributions once they hit the wage base limit of $168,800.00, and increase their Medicare taxes by 0.9% once they hit the excess wage of $200,000.00 for the year outlined by the IRS. When the new year begins, we'll automatically start withholding Social Security taxes again and revert Medicare to 1.45%.

Employees can click the "?" button next to Federal Tax Withholding to find a link to the IRS Tax Withholding Estimator if they need help figuring out what to elect.