lefty, see if this might help answer your question about that W-4:
In the United States, employers are required to withhold federal income tax, plus one-half of the Social Security tax, and one-half of the Medicare tax. Together, the employer's and employee's shares of the Social Security and Medicare taxes are known as the FICA tax. In some places, employers may be required to withhold state income tax, or even city income tax. In addition the employer is required to pay State and Federal unemployment tax.
 Social security and Medicare taxes
Social security and Medicare taxes, also known as FICA taxes must be withheld from your employees' wages. As an employer, you must also pay a matching amount of FICA taxes for your employees. As of 2007, the social security tax rate is 6.2%. The employee must have 6.2% withheld from their wages for social security taxes and the employer pays a matching amount in social security taxes until the employee reaches the wage base for the year. The wage base for social security tax in 2006 is $94,200 and for 2007 increases to $97,500. Once that amount is earned, neither the employee or the employer owes any social security tax.
The Medicare tax rate is 2.9% for the employee and the employer. The employer must withhold 1.45% of an employee's wages and pay a matching amount for Medicare tax. Unlike the Social security tax, there is no maximum wage base for the Medicare portion of the FICA tax. Both the employer and the employee continue to pay Medicare tax, no matter how much is earned.
Each employer also must pay State and Federal Unemployment Taxes (SUTA and FUTA). The FUTA rate is 6.2% but normally nets to 0.8% because the employer is allowed to take a credit of up to 5.4% for SUTA taxes that it pays. This will be the case if the employer is eligible for the maximum credit. The wage base for FUTA is $7,000 (i.e., the employer is liable for FUTA only on the first $7,000 of compensation paid to each employee per calendar year). Each state has different rate, so that employers must consult the state requirements for each applicable state regarding tax rates and maximum wage base. Many states require new business to have an average starting rate until an employment history is created. For example, Indiana requires new employers to pay 2.7% for the first 3 years. Afterwards the rate is adjusted depending on various factors, such as whether an ex-employee files a request for unemployment benefits.