Question 6.4.4: Dac Kien is married, claims three withholding allowances, an......
Finding Federal Withholding Using the Percentage Method
Dac Kien is married, claims three withholding allowances, and receives $7850 a month working as a chemical engineer for Dupont. Use the percentage method to find his withholding tax.
Step 1 The amount of one withholding allowance monthly is $337.50.
Number of allowances × Amount for one allowance = 3 × $337.50 = $1012.50
Step 2 Gross earnings – Amount from step 1 = $7850 – $1012.50 = $6837.50
Step 3 Use the table on the prior page for monthly payroll and married person.
Step 4 Go to the row of over $2,258 but not over $6,988.
Withholding = $154.50 + 15% of excess over $2,258
= $154.50 + .15 × ($6837.50 – $2,258)
= $841.43
| TABLE 4—MONTHLY 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 $713 . . . . . . . . . . . . . . . $0 Over— But not over— of excess over— $713 —$2,258 . . . $0.00 plus 10% —$713 $2,258 —$6,988 . . . $154.50 plus 15% —$2,258 $6,988 —$13,371 . . . $864.00 plus 25% —$6,988 $13,371 —$20,000 . . . $2,459.75 plus 28% —$13,371 $20,000 —$35,158 . . . $4,315.87 plus 33% —$20,000 $35,158 —$39,625 . . . $9,318.01 plus 35% —$35,158 $39,625 . . . . . . . . . . . . . . . . . $10,881.46 plus 39.6% —$39,625 |
(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 $188 . . . . . . . . . . . . . . $0 Over— But not over— of excess over— $188 —$960 . . . $0.00 plus 10% —$188 $960 —$3,325 . . . $77.20 plus 15% —$960 $3,325 —$7,783 . . . $431.95 plus 25% —$3,325 $7,783 —$16,033 . . . $1,546.45 plus 28% —$7,783 $16,033 —$34,633 . . . $3,856.45 plus 33% —$16,033 $34,633 —$34,775 . . . $9,994.45 plus 35% —$34,633 $34,775 . . . . . . . . . . . . . . . . . $10,044.15 plus 39.6% —$34,775 |