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.

Herman Swayne is a waiter at the Dixie Hotel. In his first weekly pay in March, he earned $360.00 for the 40 hours he worked. In addition, he reports his tips for February to his employer ($700.00), and the employer withholds the appropriate taxes for the tips from this first pay in March.

Calculate his net take-home pay assuming the employer withheld federal income tax (wage-bracket, married, 2 allowances), social security taxes, and state income tax (2%).

Enter deductions beginning with a minus sign (-). Round interim amounts to two decimal places. Use these values in subsequent computations then round final answer to two decimal places.

Click here to access the Wage-Bracket Method Tables.

Gross pay	$fill in the blank 1
Federal income tax	fill in the blank 2
Social security taxes - OASDI	fill in the blank 3
Social security taxes - HI	fill in the blank 4
State income tax	fill in the blank 5
Net pay	$fill in the blank 6

Tax Table B T5 - T14