Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller

Exercise 101

FEDERAL WITHHOLDING TAX Find the federal withholding tax for this employees. Use the wage bracket method. (See Examples.)
EXAMPLE
Finding Federal Withholding Using the Wage Bracket Method
Benito Flores works for Best Buy. He is single and claims no withholding allowances since he prefers to get money back from the government when filing his income tax return. This choice will increase the amount withheld from his paycheck every week. Use the wage bracket method to find his withholding tax for a 30-hour workweek in which his gross earnings were $338.
Quick TIP
It is important to use the correct table when finding the amount to withhold.
SOLUTION
Use the table for single person, weekly payroll period. The earnings of $338 are found in the row for at least $330 but less than $340 and the column for 0 withholding allowances. The amount to be withheld for federal income taxes is $36. So, Flores's gross income for the week will be reduced by $36.
EXAMPLE
Using the Wage Bracket Method for Federal Withholding
Pat Rowell is married, claims three withholding allowances, and has monthly gross earnings of $3016.47. Find her withholding tax using the wage bracket method.
SOLUTION
Use the table for married persons-monthly payroll period. Look down the two left columns, and find the range that includes Rowell's gross earnings: "at least $3000 but less than $3040." Read across the table to the column headed "3" (for the three withholding allowances). The withholding tax is $140. Had Rowell claimed five withholding allowances, her withholding tax would have been only $76.