Example 4-9

From the above example, if you indicate separately on Robinsons paycheck stub the amount of each payment, the amount of federal income tax to be withheld is computed as follows:

			Taxes Withheld
Regular monthly earnings	$2,400		$ 37.00		(from wage-bracket tax tables*)
Quarterly bonus	4,600		1,012.00		($4,600 22%)
Totals	$7,000		$ 1,049.00

The calculation of Robinsons federal income tax for the quarter would be computed as follows:

			Taxes Withheld
Regular monthly earnings	$2,400		$37.00 3 months =	$ 111.00	(from wage-bracket tables*)
Quarterly bonus	4,600			1,012.00	($4,600 22%)
				$1,123.00

*The percentage table could also be used.

Note: OASDI and HI withholdings are calculated on total earnings per pay period multiplied by number of pay periods and then added together to arrive at a quarters total withholding. Quarterly and year-to-date information would appear on Robinsons employee earnings record.

The names of the employees of Cox Security Systems and their regular salaries are shown in the following payroll register. Note that Hall and Short are paid monthly on the last payday, while all others are paid weekly.

In addition to the regular salaries, the company pays an annual bonus based on the amount of earnings for the year. For the current year, the bonus amounts to 8% of the annual salary paid to each employee. The bonus is to be paid along with the regular salaries on December 27, 20--, but the amount of the bonus and the amount of the regular salary will be shown separately on each employee's earnings statement. Assume that all employees received their regular salary during the entire year.

Prepare the payroll for the pay period ending December 27, 20--, showing the following for each employee:

• Use the wage-bracket method to withhold federal income tax from the regular salaries.
• Withhold a flat 22% on the annual bonus.
• Total salaries and bonuses are subject to a 2% state income tax and a 1% city income tax.

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

Click here to access the Wage-Bracket Method Tables.

For Period Ending December 27, 20--

Employee Name		No. of	Earnings			Deductions
	Marital	W/H		(a)	(b)	(c) FICA		(d)	(e)	(f)	(g)
	Status	Allowances	Regular	Supp'l	Total	OASDI	HI	FIT	SIT	CIT	Net Pay
Hall, Michael	M	0	$3,500.00*	$	$	$	$	$	$	$	$
Short, Joy T.	M	0	2,750.00*
Abbott, Linda	M	2	520.00
Smith, Joseph	S	5	465.00
Tols, Sean M.	S	2	380.00
Gillespie, Michelle	S	3	350.00
Smart, Jennifer	S	4	575.00
White, Matthew J.	S	2	425.00
Totals			$	$	$	$	$	$	$	$	$

*Monthly

Compute the employer's FICA taxes for the pay period ending December 27, 20--.

OASDI Taxes		HI Taxes
OASDI taxable earnings	$	HI taxable earnings	$
OASDI taxes	$	HI taxes	$