Instructions 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. Overview Overview Using the information provided here and in your text, complete the following. Generally, if an employer has the right to control what will be done and how it will be done, the worker is defined as under common-law. can reduce gross Wages include total compensation paid to employees for services upon which employers will withhold taxes on gross income. income which reduces what is subject to federal income tax. The taxable amount is what the employee is paid less Group-Term life insurance (up to $ of coverage), when authorized, is when determining federal income tax withholding. An employer uses the Form to compute the amount of income tax to withhold from employees' wages. Wage Bracket Method Wage Bracket Method Under the wage-bracket method, the process is to navigate to the proper table for the company's payroll period and the employee's filing status. Determine the intersection of filing status, Standard withholding or Form W-4, Step 2, checkbox withholding and current wages which isolates the amount of withholding. Wage Example is single and is paid $642.50 each week. What is the amount of withholding? Steps Description 1. Scroll through Publication 15-T to the table titled Wage Bracket Method Tables for Manual Payroll Systems With Forms W-4 From 2020 or Later. 2. Ensure that you are viewing the WEEKLY Payroll Period. 3. In the far left column (If the Adjusted Wage Amount (line 1h) is), scroll down in the At least to $640 and But less than $650. 4. Scrolling across the table to the Single or Married Filing Separately columns; specifically the Standard withholding column. 5. At this intersection of the wage range and the Standard withholding is the amount to be withheld. Wage Bracket Method 4. Scrolling across the table to the Single or Married Filing Separately columns; specifically the Standard withholding column. 5. At this intersection of the wage range and the Standard withholding is the amount to be withheld. 6. Click the link to view the amount of tax withheld for Wage: Wage_Example. Y Medal Points To understand how the withholding amounts were determined for the Scenarios above, complete the following steps: 1. Click link: Publication 15. 2. Click to select 2020 Publ 15-T (PDF): Federal Income Tax Withholding Methods. 3. The pfd launches. 4. Scroll the Table of Contents to view the topic titled Wage Bracket Method Tables for Manual Payroll Systems With Forms W-4 From 2020 or Later. 5. Click the associated page number link to advance to this particular topic. 6. Scroll to view the beginning of the table with withholding amounts. The IRS provides statutory wage tables for weekly, biweekly, semimonthly, monthly, daily or miscellaneous pay periods for married and single persons. Tackle It Wage Bracket Method The IRS provides statutory wage tables for weekly, biweekly, semimonthly, monthly, daily or miscellaneous pay periods for married and single persons. Tackle It Note: Enter ALL values as positive numbers and assume that Standard Withholding is used. Michael Jordan is married (filing jointly) and earns $1,427 weekly. Employee: Jordan, Michael Weekly Earnings $1,427.00 Federal Income Tax Withholding: $ Hope Solo is single and has biweekly wages of $1,140. Employee: Solo, Hope Biweekly Earnings $1,140.00 Federal Income Tax Withholding: Percentage Method: 2019 and Earlier Percentage Method: 2019 and Earlier For employees with a Form W-4 from 2019 or earlier on file, the employer uses the number of withholding allowances and marital status found on Form W-4 to calculate the federal income tax withholding. For 2019 and earlier, the percentage method is used when an employee's wages exceed the Publication 15-T tables provided. The process for this method is to take the earnings, subtract the allowances the employee declared on their W-4, resulting in the wages which determine the proper withholding. Table of Allowance Values for 2020 Weekly 83.00 Biweekly 165.00 Semimonthly 179.00 Monthly 358.00 Quarterly 1,075.00 Semiannual 2,150.00 Annual 4,300.00 Daily/Misc. 17.00 Wage Example's sister-in-law Perfect is married and claims 3 allowances. She earns $4,140.75 biweekly. Description Calculation 1. Begin with gross wages, $4,140.75. $4,140.75 2. Determine the allowancea amount based on the payroll period. $165.00 Percentage Method: 2019 and Earlier Description Calculation 1. Begin with gross wages, $4,140.75. $4,140.75 2. Determine the allowancea amount based on the payroll period. $165.00 3. Multiply the allowance value by the employee allowances claimed. X 3 (495.00) 4. Subtract allowances from gross pay, referred to as excess wages. $3,646.75 5. Using the percentage_table, identify the correct bracket. Wages starting at $3,544 but not over $7,037. $3,646.75 (3,544) 6. Compute the excess wage over the starting wage for this bracket. $101.75 7. Multiply the excess by the tax rate in the table (22%) X.22 $22.39 8. Add the bracket minimum tax, $355.14 355.14 9. Add the two amounts together which equals Perfect's total withholding. $377.53 a Based on Table of Allowance Values for 2020 above and the scenario data, Perfect is paid biweekly which corresponds to a biweekly allowance of $165.00 per allowance claimed. Percentage Method: 2019 and Earlier Tackle It Dale Earnhardt is married, claims 2 allowances, and is paid $9,510.55 on a monthly basis. Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise. To properly compute the withholding, click here to access Publication 15-T. Description Calculation 1. Begin with gross wages. $ 2. Enter the value of the allowances based on the payroll period. 3. Multiply the allowance value by the employee allowances claimed. X 2 4. Subtract allowances from gross pay, referred to as excess wages. 5. Identify the correct bracket. (Hint: Use With Forms W-4 From 2019 or Earlier table) Wages starting at $ but not over $ Percentage Method: 2019 and Earlier 1. Begin with gross wages. 2. Enter the value of the allowances based on the payroll period. 3. Multiply the allowance value by the employee allowances claimed. X 2 4. Subtract allowances from gross pay, referred to as excess wages. 5. Identify the correct bracket. (Hint: Use With Forms W-4 From 2019 or Earlier table) Wages starting at $ but not over $ $ 6. Determine the value over the starting wage for this bracket. $ 7. Multiply the overage by the tax rate in the table (enter as a decimal). x 8. Add the bracket minimum tax. 9. Add the two amounts together = Total withholding for Dale Earnhardt. $ Percentage Method: 2020 and Later Percentage Method: 2020 and Later The Tax Cust and Jobs Act (TCJA) eliminated personal withholding allowances (see Percentage Method: 2019 and Earlier). Employees hired prior to 2020 will not have to complete the 2020 Form W-4 unless they wish to make a change to Form W-4 currently on file with their employer. And, going forward, employees hired in 2020 will use the 2020 Form W-4, using one of three filing statuses: married filing jointly (MF3), single (S) or married filing separately (MFS), and head of household (HOH). Employers will use Publication 15-T to compute withholding the proper withholding. Note: Assume for purposes here that the STANDARD withholding rate schedule is used. Wage Example's brother-in-law, Exceptional, divorced last year and has custody of his two children. He earns $4,057.69 biweekly, has no adjustments on his Form W-4, and files as Head of Household. Description Calculation 1. Begin with the amo of gross wages, $4,057.69. $4,057.69 2. Using the 2020 percentage_table, identify the correct bracket. Wages starting at $4,006 but not over $6,998. $ 4,057.69 (4,006) 3. Compute the excess wage over the starting wage for this bracket. $51.69 Percentage Method: 2020 and Later Description Calculation 1. Begin with the amount of gross wages, $4,057.69. $4,057.69 2. Using the 2020 percentage_table, identify the correct bracket. Wages starting at $4,006 but not over $6,998. $ 4,057.69 (4,006) 3. Compute the excess wage over the starting wage for this bracket. $51.69 4. Multiply the excess by the tax rate in the table (24%) X.24 $12.41 5. Add the bracket minimum tax, $506.12 506.12 6. Add the two amounts together which equals Perfect's total withholding. $518.53 Tackle It Natasha Hastings is married filing jointly and paid $1,135.55 on a weekly basis. Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise. To properly compute the withholding, click here to access Publication 15-T. Percentage Method: 2020 and Later Tackle It Natasha Hastings is married filing jointly and paid $1,135.55 on a weekly basis. Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise. To properly compute the withholding, click here to access Publication 15-T. Description 1. Begin with gross wages. $ 2. Identify the correct bracket. (Hint: Use With Forms W-4 From 2020 or Later table) Wages starting at $ but not over $ 3. Determine the value over the starting wage for this bracket. 4. Multiply the overage by the tax rate in the table (enter as a decimal). 5. Add the bracket minimum tax. 6. Add the two amounts together = Total withholding for Natasha Hastings. $ Additional Medal Points Y Medal Points It has been said before and we'll say it again, practice, practice, practice. Determine the federal withholding for each employee. Determine the Federal income tax withholding for the two individuals below using the Wage Bracket Method. Serena Williams earns $1,171 semimonthly and files separately from her husband. Employee: Williams, Serena Semimonthly Earnings $1,171.00 Federal Income Tax Withholding: Lucien Laurin earns $1,522 weekly and files as Head of Household. Employee: Laurin, Lucien Monthly Earnings $1,522.00 Federal Income Tax Withholding: Additional Medal Points Determine the Federal income tax withholding for the two individuals below using the appropriate Percentage Method. Alex Rodriguez earns $11,512.00 monthly. Additional information necessary to determine Alex's tax withholding can be found on his attached 2019 W-4. Hint: Refer to the Table of Allowance Values for 2020 on the Percentage Method: Pre-2020 page. Note: Enter ALL values as positive numbers. Description Calculation 1. Begin with gross wages. 2. Enter the value of the allowances based on the payroll period. 3. Multiply the allowance value by the employee allowances claimed 4. Subtract allowances from gross pay, referred to as excess wages 5. Identify the correct bracket. Wages starting at $ but not over $ Additional Medal Points 4. Subtract allowances from gross pay, referred to as excess wages 5. Identify the correct bracket. Wages starting at $ but not over $ 6. Determine the value over the starting wage for this bracket 7. Multiply the overage by the tax rate in the table (enter as a decimal). X 8. Add the bracket minimum tax. 9. Add the two amounts together, total withholding for Alex Rodriguez. Stephen Curry earns $16,164.00 monthly. Additional information necessary to determine Stephen's tax withholding can be found on his attached 2020 W-4. Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise. Stephen Curry earns $16,164.00 monthly. Additional information necessary to determine Stephen's tax withholding can be found on his attached 2020 W-4. Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise. Description 1. Determine the amount of gross wages. $16,163.63 $ 2. Identify the correct bracket. Wages starting at $ but not over $ 3. Determine the value over the starting wage for this bracket. $ 4. Multiply the overage by the tax rate in the table (enter as a decimal). 5. Add the bracket minimum tax. 6. Add the two amounts together = Total withholding for Stephen Curry. Instructions 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. Overview Overview Using the information provided here and in your text, complete the following. Generally, if an employer has the right to control what will be done and how it will be done, the worker is defined as under common-law. can reduce gross Wages include total compensation paid to employees for services upon which employers will withhold taxes on gross income. income which reduces what is subject to federal income tax. The taxable amount is what the employee is paid less Group-Term life insurance (up to $ of coverage), when authorized, is when determining federal income tax withholding. An employer uses the Form to compute the amount of income tax to withhold from employees' wages. Wage Bracket Method Wage Bracket Method Under the wage-bracket method, the process is to navigate to the proper table for the company's payroll period and the employee's filing status. Determine the intersection of filing status, Standard withholding or Form W-4, Step 2, checkbox withholding and current wages which isolates the amount of withholding. Wage Example is single and is paid $642.50 each week. What is the amount of withholding? Steps Description 1. Scroll through Publication 15-T to the table titled Wage Bracket Method Tables for Manual Payroll Systems With Forms W-4 From 2020 or Later. 2. Ensure that you are viewing the WEEKLY Payroll Period. 3. In the far left column (If the Adjusted Wage Amount (line 1h) is), scroll down in the At least to $640 and But less than $650. 4. Scrolling across the table to the Single or Married Filing Separately columns; specifically the Standard withholding column. 5. At this intersection of the wage range and the Standard withholding is the amount to be withheld. Wage Bracket Method 4. Scrolling across the table to the Single or Married Filing Separately columns; specifically the Standard withholding column. 5. At this intersection of the wage range and the Standard withholding is the amount to be withheld. 6. Click the link to view the amount of tax withheld for Wage: Wage_Example. Y Medal Points To understand how the withholding amounts were determined for the Scenarios above, complete the following steps: 1. Click link: Publication 15. 2. Click to select 2020 Publ 15-T (PDF): Federal Income Tax Withholding Methods. 3. The pfd launches. 4. Scroll the Table of Contents to view the topic titled Wage Bracket Method Tables for Manual Payroll Systems With Forms W-4 From 2020 or Later. 5. Click the associated page number link to advance to this particular topic. 6. Scroll to view the beginning of the table with withholding amounts. The IRS provides statutory wage tables for weekly, biweekly, semimonthly, monthly, daily or miscellaneous pay periods for married and single persons. Tackle It Wage Bracket Method The IRS provides statutory wage tables for weekly, biweekly, semimonthly, monthly, daily or miscellaneous pay periods for married and single persons. Tackle It Note: Enter ALL values as positive numbers and assume that Standard Withholding is used. Michael Jordan is married (filing jointly) and earns $1,427 weekly. Employee: Jordan, Michael Weekly Earnings $1,427.00 Federal Income Tax Withholding: $ Hope Solo is single and has biweekly wages of $1,140. Employee: Solo, Hope Biweekly Earnings $1,140.00 Federal Income Tax Withholding: Percentage Method: 2019 and Earlier Percentage Method: 2019 and Earlier For employees with a Form W-4 from 2019 or earlier on file, the employer uses the number of withholding allowances and marital status found on Form W-4 to calculate the federal income tax withholding. For 2019 and earlier, the percentage method is used when an employee's wages exceed the Publication 15-T tables provided. The process for this method is to take the earnings, subtract the allowances the employee declared on their W-4, resulting in the wages which determine the proper withholding. Table of Allowance Values for 2020 Weekly 83.00 Biweekly 165.00 Semimonthly 179.00 Monthly 358.00 Quarterly 1,075.00 Semiannual 2,150.00 Annual 4,300.00 Daily/Misc. 17.00 Wage Example's sister-in-law Perfect is married and claims 3 allowances. She earns $4,140.75 biweekly. Description Calculation 1. Begin with gross wages, $4,140.75. $4,140.75 2. Determine the allowancea amount based on the payroll period. $165.00 Percentage Method: 2019 and Earlier Description Calculation 1. Begin with gross wages, $4,140.75. $4,140.75 2. Determine the allowancea amount based on the payroll period. $165.00 3. Multiply the allowance value by the employee allowances claimed. X 3 (495.00) 4. Subtract allowances from gross pay, referred to as excess wages. $3,646.75 5. Using the percentage_table, identify the correct bracket. Wages starting at $3,544 but not over $7,037. $3,646.75 (3,544) 6. Compute the excess wage over the starting wage for this bracket. $101.75 7. Multiply the excess by the tax rate in the table (22%) X.22 $22.39 8. Add the bracket minimum tax, $355.14 355.14 9. Add the two amounts together which equals Perfect's total withholding. $377.53 a Based on Table of Allowance Values for 2020 above and the scenario data, Perfect is paid biweekly which corresponds to a biweekly allowance of $165.00 per allowance claimed. Percentage Method: 2019 and Earlier Tackle It Dale Earnhardt is married, claims 2 allowances, and is paid $9,510.55 on a monthly basis. Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise. To properly compute the withholding, click here to access Publication 15-T. Description Calculation 1. Begin with gross wages. $ 2. Enter the value of the allowances based on the payroll period. 3. Multiply the allowance value by the employee allowances claimed. X 2 4. Subtract allowances from gross pay, referred to as excess wages. 5. Identify the correct bracket. (Hint: Use With Forms W-4 From 2019 or Earlier table) Wages starting at $ but not over $ Percentage Method: 2019 and Earlier 1. Begin with gross wages. 2. Enter the value of the allowances based on the payroll period. 3. Multiply the allowance value by the employee allowances claimed. X 2 4. Subtract allowances from gross pay, referred to as excess wages. 5. Identify the correct bracket. (Hint: Use With Forms W-4 From 2019 or Earlier table) Wages starting at $ but not over $ $ 6. Determine the value over the starting wage for this bracket. $ 7. Multiply the overage by the tax rate in the table (enter as a decimal). x 8. Add the bracket minimum tax. 9. Add the two amounts together = Total withholding for Dale Earnhardt. $ Percentage Method: 2020 and Later Percentage Method: 2020 and Later The Tax Cust and Jobs Act (TCJA) eliminated personal withholding allowances (see Percentage Method: 2019 and Earlier). Employees hired prior to 2020 will not have to complete the 2020 Form W-4 unless they wish to make a change to Form W-4 currently on file with their employer. And, going forward, employees hired in 2020 will use the 2020 Form W-4, using one of three filing statuses: married filing jointly (MF3), single (S) or married filing separately (MFS), and head of household (HOH). Employers will use Publication 15-T to compute withholding the proper withholding. Note: Assume for purposes here that the STANDARD withholding rate schedule is used. Wage Example's brother-in-law, Exceptional, divorced last year and has custody of his two children. He earns $4,057.69 biweekly, has no adjustments on his Form W-4, and files as Head of Household. Description Calculation 1. Begin with the amo of gross wages, $4,057.69. $4,057.69 2. Using the 2020 percentage_table, identify the correct bracket. Wages starting at $4,006 but not over $6,998. $ 4,057.69 (4,006) 3. Compute the excess wage over the starting wage for this bracket. $51.69 Percentage Method: 2020 and Later Description Calculation 1. Begin with the amount of gross wages, $4,057.69. $4,057.69 2. Using the 2020 percentage_table, identify the correct bracket. Wages starting at $4,006 but not over $6,998. $ 4,057.69 (4,006) 3. Compute the excess wage over the starting wage for this bracket. $51.69 4. Multiply the excess by the tax rate in the table (24%) X.24 $12.41 5. Add the bracket minimum tax, $506.12 506.12 6. Add the two amounts together which equals Perfect's total withholding. $518.53 Tackle It Natasha Hastings is married filing jointly and paid $1,135.55 on a weekly basis. Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise. To properly compute the withholding, click here to access Publication 15-T. Percentage Method: 2020 and Later Tackle It Natasha Hastings is married filing jointly and paid $1,135.55 on a weekly basis. Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise. To properly compute the withholding, click here to access Publication 15-T. Description 1. Begin with gross wages. $ 2. Identify the correct bracket. (Hint: Use With Forms W-4 From 2020 or Later table) Wages starting at $ but not over $ 3. Determine the value over the starting wage for this bracket. 4. Multiply the overage by the tax rate in the table (enter as a decimal). 5. Add the bracket minimum tax. 6. Add the two amounts together = Total withholding for Natasha Hastings. $ Additional Medal Points Y Medal Points It has been said before and we'll say it again, practice, practice, practice. Determine the federal withholding for each employee. Determine the Federal income tax withholding for the two individuals below using the Wage Bracket Method. Serena Williams earns $1,171 semimonthly and files separately from her husband. Employee: Williams, Serena Semimonthly Earnings $1,171.00 Federal Income Tax Withholding: Lucien Laurin earns $1,522 weekly and files as Head of Household. Employee: Laurin, Lucien Monthly Earnings $1,522.00 Federal Income Tax Withholding: Additional Medal Points Determine the Federal income tax withholding for the two individuals below using the appropriate Percentage Method. Alex Rodriguez earns $11,512.00 monthly. Additional information necessary to determine Alex's tax withholding can be found on his attached 2019 W-4. Hint: Refer to the Table of Allowance Values for 2020 on the Percentage Method: Pre-2020 page. Note: Enter ALL values as positive numbers. Description Calculation 1. Begin with gross wages. 2. Enter the value of the allowances based on the payroll period. 3. Multiply the allowance value by the employee allowances claimed 4. Subtract allowances from gross pay, referred to as excess wages 5. Identify the correct bracket. Wages starting at $ but not over $ Additional Medal Points 4. Subtract allowances from gross pay, referred to as excess wages 5. Identify the correct bracket. Wages starting at $ but not over $ 6. Determine the value over the starting wage for this bracket 7. Multiply the overage by the tax rate in the table (enter as a decimal). X 8. Add the bracket minimum tax. 9. Add the two amounts together, total withholding for Alex Rodriguez. Stephen Curry earns $16,164.00 monthly. Additional information necessary to determine Stephen's tax withholding can be found on his attached 2020 W-4. Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise. Stephen Curry earns $16,164.00 monthly. Additional information necessary to determine Stephen's tax withholding can be found on his attached 2020 W-4. Note: Enter ALL values as positive numbers and round amounts to two decimal places unless instructed otherwise. Description 1. Determine the amount of gross wages. $16,163.63 $ 2. Identify the correct bracket. Wages starting at $ but not over $ 3. Determine the value over the starting wage for this bracket. $ 4. Multiply the overage by the tax rate in the table (enter as a decimal). 5. Add the bracket minimum tax. 6. Add the two amounts together = Total withholding for Stephen Curry
