Ben Franklin is quoted as saying...

In this world, nothing is certain but death and taxes.

One of the many employer responsibilities is to withhold income taxes from employees wages and paying these taxes to the federal government. In addition, many employers must also comply with state, city, and county income tax withholding laws.

This Mastery problem will use two publications: Publication 15 which outlines amounts that should be included or excluded from gross wages and Publication 15-T which contain the Federal Income Tax Withholding Methods.

Percentage Method: 2020 and Later

The Tax Cuts and Jobs Act (TCJA) eliminated personal withholding allowances. So, going forward, employees after 2019 will use the 2020 Form W-4. This new form uses one of three filing statuses:

• Married Filing Jointly (MFJ)
• Single (S) or Married Filing Separately (MFS)
• Head of Household (HOH)

Employers will use Publication 15-T to compute withholding the proper withholding.

Wage Example's brother-in-law, Exceptional, divorced last year and has custody of his two children. He earns $8,364.75 semimonthly, has no adjustments on his Form W-4 and files as Head of Household.

^{Note: Assume for purposes here that the STANDARD withholding rate schedule is used.}

1. 	Description			Calculation
   1.	Begin with gross wages, $8,364.75, rounded to the nearest dollar.			$8,365.00
   2.	Using the 2021 percentage_table, identify the correct bracket. Wages starting at $7,654 but not over $9,508.	$ 8,365.00 (7,654)
   3.	Compute the excess wage over the starting wage for this bracket.	$711.00
   4.	Multiply the excess by the tax rate in the table (32%)	x .32		$227.52
   5.	Add the bracket's minimum tax			1,339.34
   6.	Add the two amounts together which equals Exceptional's total withholding.			$1,566.86

Making It Work Continue to assume that the STANDARD withholding rate schedule is used.

Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise.

Note: To properly compute the withholding, return to the steps provided to search for Publication 15-T (Wage Bracket Method page). Follow through step 5. Once Pub 15-T launches, scroll to the page titled 2021 Percentage Method Tables for Automated Payroll Systems.

Finley River is married filing jointly and paid $10,230.35 on a biweekly basis.

	Description
1.	Begin with gross wages, rounded to the nearest dollar.	$fill in the blank 133308fbffc206e_1
2.	Identify the correct bracket. Wages starting at $fill in the blank 133308fbffc206e_2 but not over $fill in the blank 133308fbffc206e_3.	(fill in the blank 133308fbffc206e_4)
3.	Compute value over the starting wage for this bracket.	$fill in the blank 133308fbffc206e_5
4.	Multiply the overage by the tax rate in the table (enter as a decimal).	fill in the blank 133308fbffc206e_6	$fill in the blank 133308fbffc206e_7
5.	Add the bracket minimum tax.		fill in the blank 133308fbffc206e_8
6.	Add the two amounts together = Total withholding for Naiser Tevin.		$fill in the blank 133308fbffc206e_9