Question 6.4.3: Sarah Brynski at Starbucks is married, claims two withholdin......
Sarah Brynski at Starbucks is married, claims two withholding allowances, and had weekly gross earnings of $690 one week. Use the percentage method to find the withholding tax.
CASE IN POINT
Step 1 From the table titled “Percentage Method: Amount for One Withholding Allowance,” the amount for one withholding allowance, weekly payroll is $77.90.
Number of allowances × Amount for one allowance = 2 × $77.90 = $155.80
Step 2 Gross earnings – Amount from step 1 = $690 – $155.80 = $534.20
Step 3 Use the Percentage Method Tables for weekly payroll period, married person.
Step 4 Go to the row of over $521 but not over $1,613.
Withholding = $35.70 + 15% of excess over $521
= $35.70 + •15 • ($534.20 – $521)
= $35.70 + $1.98
= $37.68
The calculator solution to this example is
690\ \boxed{-}\ 2\ \boxed{×}\ \$77.90\ \boxed{=}\ \$534.20\ \boxed{STO}
\$35.70\ \boxed{+}\ .15\ \boxed{×}\ \boxed{(}\ RCL\ \boxed{-}\ \$521\ \boxed{)}\ \boxed{=}\ \$37.68| Percentage Method: Amount for One Withholding Allowance | |
| One Withholding Allowance | Payroll Period |
| $77.90 | Weekly |
| $155.80 | Biweekly |
| $168.80 | Semimonthly |
| $337.50 | Monthly |
| TABLE 1—WEEKLY Payroll Period | |
|
(b) MARRIED person— If the amount of wages (after subtracting withholding The amount of income tax allowances) is: to withhold is: Not over $164 . . . . . . . . . . . . . . $0 Over— But not over— of excess over— $164 —$521 . . . $0.00 plus 10% —$164 $521 —$1,613 . . . $35.70 plus 15% —$521 $1,613 —$3,086 . . . $199.50 plus 25% —$1,613 $3,086 —$4,615 . . . $567.75 plus 28% —$3,086 $4,615 —$8,113 . . . $995.87 plus 33% —$4,615 $8,113 —$9,144 . . . $2,150.21 plus 35% —$8,113 $9,144 . . . . . . . . . . . . . . . . $2,511.06 plus 39.6% —$9,144 |
(a) SINGLE person (including head of household)— If the amount of wages (after subtracting withholding The amount of income tax allowances) is: to withhold is: Not over $43 . . . . . . . . . . . . . . . $0 Over— But not over— of excess over— $43 —$222 . . . $0.00 plus 10% —$43 $222 —$767 . . . $17.90 plus 15% — $222 $767 —$1,796 . . . $99.65 plus 25% —$767 $1,796 —$3,700 . . . $356.90 plus 28% —$1,796 $3,700 —$7,992 . . . $890.02 plus 33% —$3,700 $7,992 —$8,025 $2,306.38 plus 35% —$7,992 $8,025 . . . . . . . . . . . . . . . . $2,317.93 plus 39.6% —$8,025 |