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 4-2
To compute the tax using the percentage method, follow the steps illustrated below.
| Step 1 | ||||||||
| Determine the amount of gross wages earned. If the wage ends in a fractional dollar amount, you may round the gross pay to the nearest dollar. | Wilson Goodman, single, claims two allowances and earns $915.60 semimonthly. | |||||||
| Round Gross Wages to $916.00 | ||||||||
| 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 4.5. | Table of Allowance Values for semimonthly payroll period shows $172.90. | |||||||
| Multiply $172.90 2 = $345.80 | ||||||||
| 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. |
| |||||||
| 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. ($570.20 $551.00 = $19.20 12% = $2.30 + $39.70) = $42.00 | |||||||
Use the percentage method to compute the federal income taxes to withhold from the wages or salaries of each employee. If an amount is zero, enter "0". If required, 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.
| Employee No. | Employee Name | Marital Status | No. of Withholding Allowances | Gross Wage or Salary | Amount to Be Withheld | |
| 1 | Amoroso, A. | M | 4 | $1,610 | weekly | $ |
| 2 | Finley, R. | S | 0 | 825 | biweekly | |
| 3 | Gluck, E. | S | 5 | 9,630 | quarterly | |
| 4 | Quinn, S. | M | 8 | 925 | semimonthly | |
| 5 | Treave, Y. | M | 3 | 2,875 | monthly | |
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