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Use (a) the percentage method and (b) the wage-bracket method to compute the federal income taxes to withhold from the wages or salaries of each employee. Enter all amounts as positive numbers. Round your calculations and final answers to the nearest cent. Use the 2020 Federal income taxes tables for the percentage method table and the wage bracket method table

Use (a) the percentage method and (b) the wage-bracket method to compute the federal income taxes to withhold from the wages or salaries of each employee. Enter all amounts as positive numbers. Round your calculations and final answers to the nearest cent. Use the 2020 Federal income taxes tables for the percentage method table and the wage bracket method table

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Use (a) the percentage method and (b) the wage-bracket method to compute the federal income taxes to withhold from the wages or salaries of each employee. Enter all amounts as positive numbers. Round your calculations and final answers to the nearest cent.

Use the 2020 Federal income taxes tables for the percentage method table and the wage bracket method table

Amount to Be Withheld No. of Filing withholding Gross Wage Percentage Wage-Bracket Employee Allowances or Salary Method Method Status Lennon, A. MFJ N/A $675 weekly Starr, P. MFJ N/A 1,929 weekly McNeil, S. MFJ N/A 1,775 biweekly Harrison, W. MFJ N/A 2,580 semimonthly Smythe, M. MFJ N/A 5,380 monthly
Transcribed Image Text:Amount to Be Withheld No. of Filing withholding Gross Wage Percentage Wage-Bracket Employee Allowances or Salary Method Method Status Lennon, A. MFJ N/A $675 weekly Starr, P. MFJ N/A 1,929 weekly McNeil, S. MFJ N/A 1,775 biweekly Harrison, W. MFJ N/A 2,580 semimonthly Smythe, M. MFJ N/A 5,380 monthly
Example 4-2 To compute the tax using the percentage method for Manual Payroll Systems with Forms W-4 from 2020 or Later using Standard Withholding Rate Schedules, follow the steps illustrated below. Step 1 Determine the amount of gross wages earned, filing status, adjustments on Form W-4, and frequency of pay. Note: If the wage Wilson Goodman, single(S), has no adjustments on his ends in a fractional dollar amount, the wage may be rounded to the Form W-4 and earns $915.60 semimonthly. nearest dollar. However, in this text, exact wages are used. Compute tax from Tax Table A, Semimonthly, Standard Step 2 Withholding Rate Schedule, page T-3. Determine the withholding tax by referring to the appropriate Percentage Method Withholding Table (see Figure 4.6 below). ($915.60 - $517.00 = $398.60 x 10% = $39.86 + $0) = $39.86 Example 4-3 To use the wage-bracket method for Manual Payroll Systems With Forms W-4 From 2020 or Later using Standard Withholding, follow the steps illustrated below. Step 1 Select the withholding table that applies to the employee's pay Adrienne Huff is married filing jointly (MFJ). She is paid weekly period. at a rate of $815. Step 2 Locate the wage bracket (the first two columns of the table) in Locate the appropriate wage bracket (see Figure 4.7): which the employee's gross wages fall. At least $810 but less than $820 Step 3 Follow the line for the wage bracket across to the right to the Move across the line to the column showing Married Filing column showing the appropriate filing status with standard Jointly, Standard withholding. withholding. Withhold this amount of tax. The tax to withhold is $34.
Transcribed Image Text:Example 4-2 To compute the tax using the percentage method for Manual Payroll Systems with Forms W-4 from 2020 or Later using Standard Withholding Rate Schedules, follow the steps illustrated below. Step 1 Determine the amount of gross wages earned, filing status, adjustments on Form W-4, and frequency of pay. Note: If the wage Wilson Goodman, single(S), has no adjustments on his ends in a fractional dollar amount, the wage may be rounded to the Form W-4 and earns $915.60 semimonthly. nearest dollar. However, in this text, exact wages are used. Compute tax from Tax Table A, Semimonthly, Standard Step 2 Withholding Rate Schedule, page T-3. Determine the withholding tax by referring to the appropriate Percentage Method Withholding Table (see Figure 4.6 below). ($915.60 - $517.00 = $398.60 x 10% = $39.86 + $0) = $39.86 Example 4-3 To use the wage-bracket method for Manual Payroll Systems With Forms W-4 From 2020 or Later using Standard Withholding, follow the steps illustrated below. Step 1 Select the withholding table that applies to the employee's pay Adrienne Huff is married filing jointly (MFJ). She is paid weekly period. at a rate of $815. Step 2 Locate the wage bracket (the first two columns of the table) in Locate the appropriate wage bracket (see Figure 4.7): which the employee's gross wages fall. At least $810 but less than $820 Step 3 Follow the line for the wage bracket across to the right to the Move across the line to the column showing Married Filing column showing the appropriate filing status with standard Jointly, Standard withholding. withholding. Withhold this amount of tax. The tax to withhold is $34.
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