How to Deduct Social Security Tax From Gross Pay in Excel
Social Security tax must be deducted from each employee's paycheck until he reaches the maximum contribution amount for the year. Employers must also pay an additional amount of Social Security tax on behalf of each employee. If you are self-employed, you must pay both the employer and employee portion as part of your self-employment tax. Usually, the employer portion and the employee portion are calculated at the same rate. However, the 2011 tax rate is 4.2 percent for employees, 6.2 percent for employers and 10.4 percent for self-employed people, according to the Social Security Administration. The employee tax rate will return to 6.2 percent in 2012 unless there are additional changes to the law. The maximum earnings base on which Social Security tax must be paid in 2011 is $106,800. Microsoft Excel can be set up to calculate the correct amount of Social Security tax and deduct it from your gross pay or your employees' gross pay.
1.
Open a new Excel spreadsheet and format the cells, rows or columns. If you want a dollar sign to show, click on the applicable cell, row number, column letter or the upper left corner for the whole spreadsheet. Click on the "Format" tab and select "Cells." Select "Currency" from the category box, select the number of decimal places you want to display and select how you want negative numbers to show. Click "OK."
2.
Enter the gross pay amount in a cell. For example, if your gross pay is $2,500, enter "2500" in cell A1.
3.
Enter a formula in the next cell to calculate the correct amount of Social Security tax. For example, for the 2011 employee Social Security deduction, enter "=A1*.042" in cell B1. You could also enter the formula in cell A2 if you prefer the calculation to take place below the gross pay, rather than beside it. The equal sign tells Excel that you are entering a formula, and the asterisk tells it to multiply. The cell location before the asterisk is the first factor, and the number after the asterisk, which is the Social Security rate, is the second factor that will be multiplied.
4.
Enter a formula in the next cell to deduct the Social Security tax from the gross pay. For example, in cell C1 enter "=A1-B1." Or if you entered the previous formula in cell A2, then enter "=A1-A2" in cell A3. Again, the equal sign informs Excel that you are entering a formula. The minus sign tells Excel to subtract, and the two cell references tell it which cell to subtract from which cell.
5.
Check your answer to verify that it is correct. In the example of $2,500 gross pay, with a Social Security rate of 4.2 percent, the Social Security tax should show as $105, and the final calculation should show $2,395 as the difference.
6.
Copy the formulas to other cells if you need to do additional calculations. Select the cell with the formula you want to copy, choose the "Edit" tab and select "Copy." Highlight the cell or cells to which you want to copy the formula, select the "Edit" tab and choose "Paste." The formula will adjust in each row or column to the appropriate cell references. For example, if you are using cells A1 through C1 and you copy the formula from cell B1 to cell B2, Excel will automatically change the formula in cell B2 to "=A2*.042."
Writer Bio
Diane Scott started writing professionally in 2009 and has had articles published at Type-A Parent and other websites. She has extensive business and accounting experience. Scott holds a Bachelor of Science in psychology from Brigham Young University.