As we go to press, the federal income tax rates for 2021 are being determined by budget talks in Washington and not available for publication. For this edition, the 2020 federal income tax tables for Manual Payroll Systems with Forms W-4 from 2019 or earlier and 2020 FICA rates have been used. Example 4-12 To compute the tax using the percentage method for Manual Payroll Systems with Forms W-4 or Earlier, follow the steps illustrated below. Step 1 Determine the amount of gross wages earned, marital status, number of allowances, and frequency of pay. Note: If the wage ends in a fractional dollar amount, the wage may be rounded to the nearest dollar. However, in this text, exact wages are used. → Wilson Goodman, single, claims two allowances and earns $915.60 semimonthly. Step 2 Multiply the number of allowances claimed by the amount of one allowance for the appropriate payroll period, as shown in the Table of Allowance Values in Figure 4.19. → Table of Allowance Values for semimonthly payroll period shows $179.00. Multiply $179.00 × 2 = $358.00 Step 3 Subtract the amount for the number of allowances claimed from the employee’s gross pay to find the excess of wages over allowances claimed. → Gross pay $ 915.60 Less: Allowances 358.00 Excess wages $557.60 Step 4 Determine the withholding tax on the excess of wages over allowances claimed by referring to the appropriate Percentage Method Withholding Table. → Compute tax from Tax Table C, page T-15. ($557.60 - $158.00 = $399.60 × 10% = $39.96 + $0) = $39.96 Example 4-13 To use the wage-bracket method tables for Manual Payroll Systems with Forms W-4 From 2019 or Earlier, follow the steps illustrated below. Step 1 Select the withholding table that applies to the employee’s marital status and pay period. → Adrienne Huff is married and claims 3 allowances. She is paid weekly at a rate of $815. Step 2 Locate the wage bracket (the first two columns of the table) in which the employee’s gross wages fall. → Locate the appropriate wage bracket (see Figure 4.20): At least $805 but less than $820 Step 3 Follow the line for the wage bracket across to the right to the column showing the appropriate number of allowances. Withhold this amount of tax. → Move across the line to the column showing 3 allowances. The tax to withhold is $34. Use (a) the percentage method and (b) the wage-bracket method to compute the federal income taxes to withhold from the wages or salaries of each employee. Click here to access the Table of Allowance Values. Click here to access the Percentage Method Tables. Click here to access the Wage-Bracket Method Tables. Round your answer to the two decimal places. Enter all amounts as positive numbers. Amount to Be Withheld Employee Marital Status No. of Withholding Allowances Gross Wage or Salary Percentage Method Wage-Bracket Method Corn, A. S 2 $675 weekly $fill in the blank 1 $fill in the blank 2 Fogge, P. S 1 1,365 weekly fill in the blank 3 fill in the blank 4 Felps, S. M 6 1,775 biweekly fill in the blank 5 fill in the blank 6 Carson, W. M 4 2,480 semimonthly fill in the blank 7 fill in the blank 8 Helm, M. M 9 5,380 monthly fill in the blank 9 fill in the blank 10

As we go to press, the federal income tax rates for 2021 are being determined by budget talks in Washington and not available for publication. For this edition, the 2020 federal income tax tables for Manual Payroll Systems with Forms W-4 from 2019 or earlier and 2020 FICA rates have been used. Example 4-12 To compute the tax using the percentage method for Manual Payroll Systems with Forms W-4 or Earlier, follow the steps illustrated below. Step 1 Determine the amount of gross wages earned, marital status, number of allowances, and frequency of pay. Note: If the wage ends in a fractional dollar amount, the wage may be rounded to the nearest dollar. However, in this text, exact wages are used. → Wilson Goodman, single, claims two allowances and earns $915.60 semimonthly. Step 2 Multiply the number of allowances claimed by the amount of one allowance for the appropriate payroll period, as shown in the Table of Allowance Values in Figure 4.19. → Table of Allowance Values for semimonthly payroll period shows $179.00. Multiply $179.00 × 2 = $358.00 Step 3 Subtract the amount for the number of allowances claimed from the employee’s gross pay to find the excess of wages over allowances claimed. → Gross pay $ 915.60 Less: Allowances 358.00 Excess wages $557.60 Step 4 Determine the withholding tax on the excess of wages over allowances claimed by referring to the appropriate Percentage Method Withholding Table. → Compute tax from Tax Table C, page T-15. ($557.60 - $158.00 = $399.60 × 10% = $39.96 + $0) = $39.96 Example 4-13 To use the wage-bracket method tables for Manual Payroll Systems with Forms W-4 From 2019 or Earlier, follow the steps illustrated below. Step 1 Select the withholding table that applies to the employee’s marital status and pay period. → Adrienne Huff is married and claims 3 allowances. She is paid weekly at a rate of $815. Step 2 Locate the wage bracket (the first two columns of the table) in which the employee’s gross wages fall. → Locate the appropriate wage bracket (see Figure 4.20): At least $805 but less than $820 Step 3 Follow the line for the wage bracket across to the right to the column showing the appropriate number of allowances. Withhold this amount of tax. → Move across the line to the column showing 3 allowances. The tax to withhold is $34. Use (a) the percentage method and (b) the wage-bracket method to compute the federal income taxes to withhold from the wages or salaries of each employee. Click here to access the Table of Allowance Values. Click here to access the Percentage Method Tables. Click here to access the Wage-Bracket Method Tables. Round your answer to the two decimal places. Enter all amounts as positive numbers. Amount to Be Withheld Employee Marital Status No. of Withholding Allowances Gross Wage or Salary Percentage Method Wage-Bracket Method Corn, A. S 2 $675 weekly $fill in the blank 1 $fill in the blank 2 Fogge, P. S 1 1,365 weekly fill in the blank 3 fill in the blank 4 Felps, S. M 6 1,775 biweekly fill in the blank 5 fill in the blank 6 Carson, W. M 4 2,480 semimonthly fill in the blank 7 fill in the blank 8 Helm, M. M 9 5,380 monthly fill in the blank 9 fill in the blank 10

PAYROLL ACCT.,2019 ED.(LL)-TEXT

19th Edition

ISBN:9781337619783

Author:BIEG

Publisher:BIEG

Chapter5: Unemployment Compensation Taxes

Section: Chapter Questions

Problem 12PA

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Question

Example 4-12

To compute the tax using the percentage method for Manual Payroll Systems with Forms W-4 or Earlier, follow the steps illustrated below.

Step 1
Determine the amount of gross wages earned, marital status, number of allowances, and frequency of pay. Note: If the wage ends in a fractional dollar amount, the wage may be rounded to the nearest dollar. However, in this text, exact wages are used.

→

Wilson Goodman, single, claims two allowances and earns $915.60 semimonthly.

Step 2
Multiply the number of allowances claimed by the amount of one allowance for the appropriate payroll period, as shown in the Table of Allowance Values in Figure 4.19.

→

Table of Allowance Values for semimonthly payroll period shows $179.00.
Multiply $179.00 × 2 = $358.00

Step 3
Subtract the amount for the number of allowances claimed from the employee’s gross pay to find the excess of wages over allowances claimed.

→

Gross pay	$ 915.60
Less: Allowances	358.00
Excess wages	$557.60

Step 4
Determine the withholding tax on the excess of wages over allowances claimed by referring to the appropriate Percentage Method Withholding Table.

→

Compute tax from Tax Table C, page T-15.

($557.60 - $158.00 = $399.60 × 10% = $39.96 + $0) = $39.96

Example 4-13

To use the wage-bracket method tables for Manual Payroll Systems with Forms W-4 From 2019 or Earlier, follow the steps illustrated below.

Step 1 Select the withholding table that applies to the employee’s marital status and pay period.	→	Adrienne Huff is married and claims 3 allowances. She is paid weekly at a rate of $815.
Step 2 Locate the wage bracket (the first two columns of the table) in which the employee’s gross wages fall.	→	Locate the appropriate wage bracket (see Figure 4.20): At least $805 but less than $820
Step 3 Follow the line for the wage bracket across to the right to the column showing the appropriate number of allowances. Withhold this amount of tax.	→	Move across the line to the column showing 3 allowances. The tax to withhold is $34.

Use (a) the percentage method and (b) the wage-bracket method to compute the federal income taxes to withhold from the wages or salaries of each employee.

Click here to access the Table of Allowance Values.

Click here to access the Percentage Method Tables.

Click here to access the Wage-Bracket Method Tables.

Round your answer to the two decimal places. Enter all amounts as positive numbers.

					Amount to Be Withheld
Employee	Marital Status	No. of Withholding Allowances	Gross Wage or Salary	Percentage Method	Wage-Bracket Method
Corn, A.	S	2	$675	weekly	$fill in the blank 1	$fill in the blank 2
Fogge, P.	S	1	1,365	weekly	fill in the blank 3	fill in the blank 4
Felps, S.	M	6	1,775	biweekly	fill in the blank 5	fill in the blank 6
Carson, W.	M	4	2,480	semimonthly	fill in the blank 7	fill in the blank 8
Helm, M.	M	9	5,380	monthly	fill in the blank 9	fill in the blank 10

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