Example 4 2 To compute the tax using the percentage method, 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 6 Table of Allowance Values for semimonthly payroll period shows $175 00 Multiply $175 00 2 $350 00 Step 3 Subtract the amount for the number of allowances claimed from the employees gross pay to find the excess of wages over allowances claimed Gross pay $915 60 Less Allowances 350 00 Excess wages $565 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 3(a), page T 3 ($565 60 $563 00 $2 60 12 $0 31 $40 50) $40 81 Example 4 3 To use the wage bracket method, 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 7) At least $810 but less than $821 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 $35 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 Enter all amounts as positive numbers Round your calculations and final answers to the nearest cent 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 Amount to Be Withheld Employee Marital Status No of Withholding Allowances Gross Wage or Salary Percentage Method Wage Bracket Method Corn, A M 2 $675 weekly $fill in the blank 1 $fill in the blank 2 Fogge, P M 9 1,960 weekly fill in the blank 3 Must use percentage method Felps, S M 0 1,775 biweekly fill in the blank 5 fill in the blank 6 Carson, W M 7 2,580 semimonthly fill in the blank 7 fill in the blank 8 Helm, M M 4 5,380 monthly fill in the blank 9 Must use percentage method

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Example 4-2 To compute the tax using the percentage method, follow the steps illustrated below. Step 1 Determine the amount of gross wages earned, marital

Example 4-2

To compute the tax using the percentage method, 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 4.6.

Table of Allowance Values for semimonthly payroll period shows $175.00.

Multiply $175.00 2 = $350.00

Step 3

Subtract the amount for the number of allowances claimed from the employees gross pay to find the excess of wages over allowances claimed.

Gross pay	$915.60
Less: Allowances	350.00
Excess wages	$565.60

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 3(a), page T-3. ($565.60 $563.00 = $2.60 12% = $0.31 + $40.50) = $40.81

Example 4-3

To use the wage-bracket method, 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 4.7):
		At least $810 but less than $821
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 $35.

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. Enter all amounts as positive numbers. Round your calculations and final answers to the nearest cent.

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.

				Amount to Be Withheld
Employee	Marital Status	No. of Withholding Allowances	Gross Wage or Salary	Percentage Method	Wage-Bracket Method
Corn, A.	M	2	$675 weekly	$fill in the blank 1	$fill in the blank 2
Fogge, P.	M	9	1,960 weekly	fill in the blank 3	Must use percentage method
Felps, S.	M	0	1,775 biweekly	fill in the blank 5	fill in the blank 6
Carson, W.	M	7	2,580 semimonthly	fill in the blank 7	fill in the blank 8
Helm, M.	M	4	5,380 monthly	fill in the blank 9	Must use percentage method