Question
Note: In this chapter and in all succeeding work throughout the course, unless instructed otherwise , calculate hourly rates and overtime rates as follows: 1.
Note: In this chapter and in all succeeding work throughout the course, unless instructed otherwise, calculate hourly rates and overtime rates as follows:
| 1. | Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the overtime rate). | |
| 2. | If the third decimal place is 5 or more, round to the next higher cent. | |
| 3. | If the third decimal place is less than 5, simply drop the third decimal place. | |
| Examples: | Monthly rate $1,827 Weekly rate ($1,827 12)/52 = $421.615 rounded to $421.62 Hourly rate $421.62/40 = $10.540 rounded to $10.54 O.T. rate $10.54 1.5 = $15.81 | |
Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow.
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 4.6): | |
| At least $815 but less than $825 | ||
| 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 $36. |
Sean Matthews is a waiter at the Duluxe Lounge. In his first weekly pay in March, he earned $300.00 for the 40 hours he worked. In addition, he reports his tips for February to his employer ($500.00), 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 (-).
Click here to access the Wage-Bracket Method Tables.
| Gross pay | $ |
| Federal income tax | |
| Social security taxes - OASDI | |
| Social security taxes - HI | |
| State income tax | |
| Net pay | $ |
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