Example 4-8

From the above example, if you indicate separately on Robinson's paycheck stub the amount of each payment, the amount of federal income tax to be withheld is computed as follows:

Taxes Withheld

Regular monthly earnings $2,400 $ 31.00 (from wage-bracket tax tables*)

Quarterly bonus 4,600 1,012.00 ($4,600 22%)

Totals $7,000 $ 1,043.00

The calculation of Robinson's federal income tax for the quarter would be computed as follows:

Taxes Withheld

Regular monthly earnings $2,400 $31.00 3 months = $ 93.00 (from wage-bracket tax table B*)

Quarterly bonus 4,600 1,012.00 ($4,600 22%)

$1,105.00

*The percentage table could also be used.

Note: OASDI and HI withholdings are calculated on total earnings per pay period multiplied by number of pay periods and then added together to arrive at a quarter's total withholding. Quarterly and year-to-date information would appear on Robinson's employee earnings record.

The names of the employees of Cox Security Systems and their regular salaries are shown in the following payroll register. Note that Hall and Short are paid monthly on the last payday, while all others are paid weekly.

In addition to the regular salaries, the company pays an annual bonus based on the amount of earnings for the year. For the current year, the bonus amounts to 8% of the annual salary paid to each employee. The bonus is to be paid along with the regular salaries on December 27, 20--, but the amount of the bonus and the amount of the regular salary will be shown separately on each employee's earnings statement. Assume that all employees received their regular salary during the entire year.

Prepare the payroll for the pay period ending December 27, 20--, showing the following for each employee:

Use the wage-bracket method to withhold federal income tax from the regular salaries.

Withhold a flat 22% on the annual bonus.

Total salaries and bonuses are subject to a 2% state income tax and a 1% city income tax.

Enter all amounts as positive numbers. Round your answers to the nearest cent.

As we go to press, the federal income tax rates for 2021 are being determined by budget talks in Washington and not available for publication. For this edition, the 2020 federal income tax tables for Manual Systems with Forms W-4 from 2020 or later with Standard Withholding and 2020 FICA rates have been used.

Click here to access the Wage-Bracket Method Tables.

For Period Ending December 27, 20--

Employee Name No. of Earnings Deductions

Filing W/H (a) (b) (c) FICA (d) (e) (f) (g)

Status Allowances Regular Supp'l. Total OASDI HI FIT SIT CIT Net Pay

Hall, Michael MFJ N/A $3,500.00* $fill in the blank 1

280.00

$fill in the blank 2

3,780.00

$fill in the blank 3

217.00

$fill in the blank 4

54.81

$fill in the blank 5

$fill in the blank 6

70.00

$fill in the blank 7

35.00

$fill in the blank 8

Short, Joy T. MFJ N/A 2,750.00* fill in the blank 9

220.00

fill in the blank 10

2,970.00

fill in the blank 11

170.50

fill in the blank 12

43.07

fill in the blank 13

fill in the blank 14

55.00

fill in the blank 15

27.50

fill in the blank 16

Abbott, Linda S N/A 520.00 fill in the blank 17

41.60

fill in the blank 18

561.60

fill in the blank 19

32.24

fill in the blank 20

8.14

fill in the blank 21

47.15

fill in the blank 22

10.40

fill in the blank 23

5.20

fill in the blank 24

414.29

Smith, Joseph HH N/A 465.00 fill in the blank 25

37.20

fill in the blank 26

502.20

fill in the blank 27

28.83

fill in the blank 28

7.28

fill in the blank 29

28.18

fill in the blank 30

9.30

fill in the blank 31

4.65

fill in the blank 32

384.45

Tols, Sean M. HH N/A 380.00 fill in the blank 33

30.40

fill in the blank 34

410.40

fill in the blank 35

23.56

fill in the blank 36

5.95

fill in the blank 37

27.69

fill in the blank 38

7.60

fill in the blank 39

3.80

fill in the blank 40

309.52

Gillespie, Michelle S N/A 350.00 fill in the blank 41

28.00

fill in the blank 42

378.00

fill in the blank 43

21.70

fill in the blank 44

5.48

fill in the blank 45

24.16

fill in the blank 46

7.00

fill in the blank 47

3.50

fill in the blank 48

286.42

Smart, Jennifer MFJ N/A 575.00 fill in the blank 49

46.00

fill in the blank 50

621.00

fill in the blank 51

35.65

fill in the blank 52

9.00

fill in the blank 53

47.12

fill in the blank 54

11.50

fill in the blank 55

5.75

fill in the blank 56

463.12

White, Matthew J. MFJ N/A 425.00 fill in the blank 57

34.00

fill in the blank 58

459.00

fill in the blank 59

26.65

fill in the blank 60

6.66

fill in the blank 61

26.48

fill in the blank 62

8.50

fill in the blank 63

4.25

fill in the blank 64

350.66

Totals $fill in the blank 65

8,965.00

$fill in the blank 66

717.2

$fill in the blank 67

9,682.20

$fill in the blank 68

555.83

$fill in the blank 69

140.39

$fill in the blank 70

$fill in the blank 71

179.30

$fill in the blank 72

89.65

$fill in the blank 73

*Monthly

Compute the employer's FICA taxes for the pay period ending December 27, 20--.

OASDI Taxes HI Taxes

OASDI taxable earnings $fill in the blank 74

8,965.00

HI taxable earnings $fill in the blank 75

8,965.00

OASDI taxes $fill in the blank 76

600.30

HI taxes $fill in the blank 77

140.39