Use the Wage Bracket Method to calculate withholding

Learning Objective 3:

Compute the amount of Federal Income Tax Withheld

The most recent version of Publication 15 can be found at the Internal Revenue Service internet site (www.irs.gov), but for this exercise, you will download a copy using the link below. Depending on how your browser is set up, this publication may appear in a new browser tab or window, or it may be downloaded to your computer, and you will have to click on the downloaded file to display it using Adobe Acrobat. Click on the link below, and when you have displayed Publication 15, come back to this exercise.

Publication 15

In this step, you will use the Wage Bracket Method to calculate withholding. In this method, you do not need to calculate withholding allowances, but there are fairly-low limits as to the level of pay that the tables cover. For higher levels of pay you will need to use the Percentage Method from the previous step.

Yumiko Noda is single and has elected 0 withholding allowances. She is paid a salary of $2080 twice per month (semimonthly).

First, find the first table in Publication 15 that applies to single taxpayers paid semimonthly. These tables follow the Percentage Method tables. On which page do you find the first table for this category?

Now calculate Yumiko Nodas total withholding for the pay period. Search down the first column, looking for the wage bracket that includes her gross semimonthly pay. What is the lower bound of that bracket (At least)?

$

Finally, scan across this row to find the column that matches the number of allowances that she has elected to claim. At this table intersection, you will find the withholding amount for each semimonthly pay period for Yumiko Noda:

$