Example 4-11 GROSSING-UP. Cotter Company wants award a $4,000 bonus to Donna D'Amico. In addition, it wants the net bonus payment to equal $4,000. Assuming D'Amico is still under the OASDI/FICA limit, the calculation would be: $4,000 A. 1 -0.22 (Supplemental W/H rate) - 0.062 (OASDI) - 0.0145 (HI) $4,000 B. = $5,685.86 grossed-up bonus 0.7035 C. $5,685.85 1,250.89 Gross bonus amount Federal income tax withheld OASDI tax withheld HI tax withheld 352.52 82.44 Take-home bonus check $4,000.00 If state or local taxes apply, they must also be included in the formula *Need to subtract $0.01 from $5,685.86 in order to arrive at $4,000.00 (due to rounding) Damerly Company (a Utah employer) wants to give a holiday bonus check of $325 to each employee. Since it wants the check amount to be $325, it will need to gross-up the amount of the bonus. Calculate the withholding taxes and the gross amount of the bonus to be made to John Rolen if his cumulative earnings for the year are $46,910. Besides being subject to social security taxes and federal income tax (supplemental rate), a 4.95% Utah income tax must be withheld on supplemental payments. Enter deductions beginning with a minus sign (-). You may need to adjust by a penny (subtract or add) to the gross amount to get net pay to calculate exactly to $325.00. Round your calculations and final answers to the nearest cent. Washington and not available for publication. For this edition, the 2020 federal income tax tables for Manual Systems with Forms W-4 As we go to press, the federal income tax rates for 2021 are being determined by budget talks from 2020 or later with Standard Withholding and 2020 FICA rates have been used. Gross bonus amount Federal income tax withheld OASDI tax withheld HI tax withheld Utah income tax withheld Take-home bonus check Example 4-11 GROSSING-UP. Cotter Company wants award a $4,000 bonus to Donna D'Amico. In addition, it wants the net bonus payment to equal $4,000. Assuming D'Amico is still under the OASDI/FICA limit, the calculation would be: $4,000 A. 1 -0.22 (Supplemental W/H rate) - 0.062 (OASDI) - 0.0145 (HI) $4,000 B. = $5,685.86 grossed-up bonus 0.7035 C. $5,685.85 1,250.89 Gross bonus amount Federal income tax withheld OASDI tax withheld HI tax withheld 352.52 82.44 Take-home bonus check $4,000.00 If state or local taxes apply, they must also be included in the formula *Need to subtract $0.01 from $5,685.86 in order to arrive at $4,000.00 (due to rounding) Damerly Company (a Utah employer) wants to give a holiday bonus check of $325 to each employee. Since it wants the check amount to be $325, it will need to gross-up the amount of the bonus. Calculate the withholding taxes and the gross amount of the bonus to be made to John Rolen if his cumulative earnings for the year are $46,910. Besides being subject to social security taxes and federal income tax (supplemental rate), a 4.95% Utah income tax must be withheld on supplemental payments. Enter deductions beginning with a minus sign (-). You may need to adjust by a penny (subtract or add) to the gross amount to get net pay to calculate exactly to $325.00. Round your calculations and final answers to the nearest cent. Washington and not available for publication. For this edition, the 2020 federal income tax tables for Manual Systems with Forms W-4 As we go to press, the federal income tax rates for 2021 are being determined by budget talks from 2020 or later with Standard Withholding and 2020 FICA rates have been used. Gross bonus amount Federal income tax withheld OASDI tax withheld HI tax withheld Utah income tax withheld Take-home bonus check