Final answer:
Employees may opt for additional withholdings from their paycheck if they owed taxes previously or desire a larger tax refund. While other deductions exist, they are not typically adjusted through tax withholdings. The W-4 form determines withholding amounts, and self-employed individuals are responsible for both the employee and employer portions of payroll taxes.
Step-by-step explanation:
Employees may choose to have additional withholdings from their paycheck for a few reasons. When an employee has owed taxes from a prior year, they might increase withholdings to avoid a repeat scenario. Alternatively, employees who wish to receive a larger tax refund at the end of the year may also do so by increasing their withholdings. It's worth mentioning that while additional withholdings could apply to other deductions like health insurance premiums or to cover garnishments, these are not typically considered part of tax withholding adjustments.
When filling out a W-4 form, your selections impact the withholding amount. If the aim is to reduce the risk of underpayment penalties, then opting for more withholdings might be beneficial. Payroll taxes are generally split between the employer and the employee, but if you're self-employed or part of the gig economy, you're responsible for both halves.
The social security tax, which is 6.2% on employees' income up to a certain threshold, is considered a proportional tax because it is a flat percentage up to an income cap. For individuals owning a corporation or self-employed, various types of federal tax, including income tax, self-employment tax, and possibly corporate taxes will apply.