It’s payday at Amazon, and your check gets through. Naturally, many of your colleagues rant about a big portion of their salaries getting deducted as taxes. After all, how much does Amazon take out of your check?
Amazon does not deduct taxes from your salary for itself. According to the law, all employers must deduct a portion from employee wages and pay it to the government. Every company employee has to play their part in the payment of federal, social security, and state or local taxes.
If you calculate all these taxes, it takes up 1/4th of your salary.
If you are also concerned about why Amazon takes a huge chunk out of your salary, it’s not Amazon’s fault. Read on to find out a better explanation of how it works.
Deductions From Amazon’s Check
You might be excited about landing a high-paying job at Amazon, but wait until you get your first check. The reality will hit you hard when you find out that 1/4th of your salary gets deducted.
It’s normal to be disappointed with your employer, but it’s not the company at fault. Amazon has no power to decide taxes; it only follows the orders of the government.
When a company hires you, you’ll be required to fill out a W-4 form so that the company can withhold the tax from your check and send it to the government. This form adjusts the amount withheld based on the number of dependents you have.
Breakdown of Deductions
The concept of these deductions can be confusing and might not make sense at first, but you’ll eventually get the hang of it. Long story short, the government demands taxes from employees, and the employer acts as an agent to collect those taxes and submit them to the government.
Let’s take a deeper look at how many types of taxes will be deducted from your paycheck at Amazon.
Federal Tax
As a standard rule, every company is bound to pay a federal tax, a percentage of which is withheld from employees, and the employer pays the remaining part. The government uses this tax to invest in the country and improve its infrastructure by providing goods and services to facilitate its citizens.
State Tax
In some states, it’s mandatory for companies to pay a state tax. This tax funds services such as hospitals, roads, fire departments, police, and education.
Only some states do not collect personal income tax, including the following:
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington
- Wyoming
The sales tax varies by state; each has its own tax system to accommodate its residents.
FICA (Federal Insurance Contributions Act) Tax
According to the Federal Insurance Contributions Act, passed in the 1930s, all employers and employees must pay a portion of their revenue as Social Security and Medicare taxes. This tax is collected to support deserving people such as retirees, differently-abled individuals, or people enrolled in federal health insurance programs.
The total Social Security tax rate is 12.4%, divided in half, so the employer and employee have to pay 6.2% each. As for the Medicare tax, employers and employees have to pay 1.45% each, making a total of 2.9%. A total of 15.3% FICA tax is to be paid, half of which comes from employees and the other half from employers.
Employees who earn more than $200,000 are liable to pay an additional 0.9% Medicare tax on every dollar above the threshold.
Summary
It can be pretty disappointing to see a huge portion of your salaries getting deducted as taxes. One might blame Amazon for these deductions, but they have nothing to do with them. All employers must follow the rules and regulations of the government and pay taxes.
As an employee at Amazon, 1/4th of your salary will be deducted as federal, state, and FICA tax. The government uses these taxes to improve the country’s infrastructure, such as roads, education, and healthcare facilities.
Frequently Asked Questions
Does Amazon Deduct Taxes From Part-Time Employees?
The deduction of taxes is not Amazon’s decision; it all depends on a W-4 form. If you have filled out the form, the company will deduct the tax regardless of your employment type.
Why Does Amazon Take a Portion of Employees’ Salaries?
Amazon does not take a cut of employees’ pay; they only follow the tax rules set by the government. Every company is required by law to withhold a portion of their employee’s wages to pay federal and state taxes. So technically, the employer acts as a client to collect tax from employees and send it to the government.
