Paying federal income tax

Use the percentage method to compute the federal income taxes to withhold from the wages or salaries of each employee.

 

4–2A.

 

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

 

Eaton Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees.  Find the amount to withhold from the wages paid each employee.

 

4–4A.

 

Employee	Marital Status	No. of Withholding Allowances	Payroll Period W = Weekly S = Semimonthly M = Monthly D = Daily	Wage	Amount to Be Withheld
Hal Bower	M	1	W	$1,350
Ruth Cramden	S	1	W	590
Gil Jones	S	3	W	675
Teresa Kern	M	6	M	4,090
Ruby Long	M	2	M	2,730
Katie Luis	M	8	S	955
Susan Martin	S	1	D	96
*Jim Singer	S	4	S	2,610
Martin Torres	M	4	M	3,215

 

 

 

*Must use percentage method (Jim Singer ONLY)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Damerly Company wants to give a holiday bonus check of $250 to each employee.  Since it wants the check amount to be $250, it will need to gross up the amount of the bonus.  Calculate the withholding  taxes and gross amount of the bonus to be made to John Rolen if his cumulative earnings for the year are $46,910.  Besides, being subject to social security taxes and federal income tax (supplemental rate), a 7% California income tax must be withheld on supplemental payments.

 

4–6A.

 

(a)                                                                           $250

 

1 – 0.25 (supplemental federal rate) – 0.062 (OASDI) – 0.0145 (HI) – 0.07 (California tax) = ___________

 

 

 

(b)  $250/(1 – 0.3965) = __________

 

 

 

(c)  Gross bonus amount __________

 

Federal income tax withheld __________

 

OASDI tax withheld ____________

 

HI tax withheld ____________

 

California income tax withheld ___________

 

Take-home bonus check __________

 

 

 

George Clausen (age 48) is employed by Kline Company and is paid a salary of $42,640.  He has just decided to join the company’s Simple Retirement Account (IRA form) and has a few questions.  Answer the following:

 

4–11A.

 

(a)   Clausen’s maximum contribution _____________

 

(b)   Kline Company’s contribution (3%) _____________

 

(c)   Clausen’s take-home pay with the

 

retirement contribution deducted:

 

Weekly pay…………………………………………………….               $  820.00

 

FICA—OASDI……………………………………………………..            ______

 

FICA—HI……………………………………………………………            ______

 

FIT ($820.00 – $230.77 = $589.23 taxable)……………            _________*

 

State income tax ($820.00 × 0.023)………………………            ______

 

Retirement contribution ($12,000 ÷ 52)…………   ….               _______

 

Take-home pay……………………………………………….               _______

 

*Married, 2 allowances.

 

(d)   Clausen’s take-home pay without the

 

retirement contribution deducted:

 

Weekly pay…………………………………………………..                $820.00

 

FICA—OASDI………………………………………………….            ______

 

FICA—HI………………………………………………………..            ______

 

FIT (on $820.00)………………………………………………            ______

 

State income tax ($820.00 × 0.023)……………………            ______

 

Take-home pay……………………………………………….            ______