Self-Study Problem 9.1

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a. John and Lillian Miles intend to file jointly in 2022. The Miles' address is 456 Peachtree Court, Atlanta, GA 30310. John expects to earn wages of $40,000 in 2022 and Lillian's wages are expected to be very similar at $40,400. They have two dependent children aged 13 and 17. Lillian also has a small business that she expects to generate qualified business income of $6,500 in 2022. She would prefer to increase her withholding rather than make estimated tax payments. They expect to make a $4,000 deductible IRA contribution in 2022 and use the standard deduction. Assuming she is the higher income earner and is paid monthly, prepare Form W-4 for Lillian Miles including worksheets for steps 2(b) and 4(b), if needed.

the worksheet below and the Wage Bracket Method tables that follow to 2. wage BraCKet MethOd Tables gure federal income tax withholding. for Ma nual Payro" syStemS WIth These Wage Bracket Method tables cover a limited amount of annual wages (generally, less than $100,000). If you can't use the Wage Bracket Method FOI'ITIS W-4 From 2020 Or Later tables because taxable wages exceed the amount from the last bracket of the table {based on ling status and pay period), use the Percentage Method If you compute payroll manually, your employee has submitted a Form W-4 tables in section 4' for 2020 or later, and you prefer to use Worksheet 2. Employer's Withholding Worksheet for Wage Bracket Method Tables for Manual Payroll Systems With Forms W-4 From 2020 or Later Step 1. Adjust the employee's wage amount 1a Enter the employee's total taxable wages this payroll period ......................... 1b Enter the number of pay periods you have per year (see Table 5) ...................... 1c Enter the amount from Step 4(a) of the employee's Form W-4 ......................... 1d Divide the amount on line 1c by the number of pay periods on line 1b ................... 1e Add lines 1a and 1d ....................................................... 1f Enter the amount from Step 4(b) of the employee's Form W4 ........................ lg Divide the amount on line If by the number of pay periods on line 1b ................... 1h Subtract line lg from line 1e. If zero or less, enter -0-. This is the Adjusted Wage Amount . Step 2. Figure the Tentative Withholding Amount 2a Use the amount on line 1h to look up the tentative amount to withhold in the appropriate Wage Bracket Method table in this section for your pay frequency, given the employee's filing status and whether the employee has checked the box in Step 2 of Form W-4. This is the Tentative Withholding Amount . . . . Step 3. Account for tax credits 3a Enter the amount from Step 3 of the employee's Form W-4 ............................ 3b Divide the amount on line 3a by the number of pay periods on line 1b ................... 3c Subtract line 3b from line 2a. If zero or less, enter -0- ................................. Step 4. Figure the final amount to withhold 4a Enter the additional amount to withhold from Step 4(c) of the employee's Form W-4 ....... 4'3 Add lines 3c and 4a. This is the amount to withhold from the employee's wages this pay period Keep for Your Records M K4. 4. g Q :1 :1 :1 EU HUD U Self-Study Problem 9.1 a. John and Lillian Miles intend to file jointly in 2022. The Miles' address is 456 Peachtree Court, Atlanta, GA 30310. John expects to earn wages of $40,000 in 2022 and Lillian's wages are expected to be very similar at $40,400. They have two dependent children aged 13 and 17. Lillian also has a small business that she expects to generate qualified business income of $6,500 in 2022. She would prefer to increase her withholding rather than make estimated tax payments. They expect to make a $4,000 deductible IRA contribution in 2022 and use the standard deduction. Assuming she is the higher income earner and is paid monthly, prepare a Form W-4 for Lillian Miles including worksheets for steps 2(b) and 4(b), if needed. Employee's Withholding Certificate OMB No. 1545-0074 Form W-4 Complete Form W-4 so that your employer can withhold the correct federal income tax Department of the from your pay. 2022 Treasury Internal Give Form W-4 to your employer. Revenue Service Your withholding is subject to review by the IRS. Step 1: (a) First name and middle initial Last name b) Your social security number Enter Lillian V Miles Personal Information Address Does your name match the 456 Peachtree Court name on your social security City or town, state, and ZIP code card? If not, to ensure you get Atlanta, GA 30310 credit for your earnings, contact SSA at 800-772-1213 or go to www.ssa.gov . (c) a. Single or Married filing separately b. Married filing jointly or Qualifying widow(er) c. Head of household (Check only if you're unmarried and pay more than half the costs of keeping up a home for yourself and a qualifying individual.) b. Complete Steps 2-4 ONLY if they apply to you; otherwise, skip to Step 5. See page 2 for more information on each step, who can claim exemption from withholding, when to use the estimator at www.irs.gov/W4App , and privacy. Step 2: Complete this step if you (1) hold more than one job at a time, or (2) are married filing jointly and your spouse also works. Multiple Jobs The correct amount of withholding depends on income earned from all of these jobs. or Spouse Do only one of the following. Works (a) Use the estimator at www.irs.gov/W4App for most accurate withholding for this step (and Steps 3-4); or (b) Use the Multiple Jobs Worksheet on page 3 and enter the result in Step 4(c) below for roughly accurate withholding; or (c) If there are only two jobs total, you may check this box. Do the same on Form W-4 for the other job. This option is accurate for jobs with similar pay; otherwise, more tax than necessary may be withheld . . . .DO TIP: To be accurate, submit a 2022 Form W-4 for all other jobs. If you (or your spouse) have self-employment income, including as an independent contractor, use the estimator. Complete Steps 3-4(b) on Form W-4 for only ONE of these jobs. Leave those steps blank for the other jobs. (Your withholding will be most accurate if you complete Steps 3-4(b) on the Form W-4 for the highest paying job.) Step 3: If your total income will be $200,000 or less ($400,000 or less if married filing jointly): Claim Multiply the number of qualifying children under age 17 by $2,000 Dependents 2,000 Multiply the number of other dependents by $500 . . . . 500 Add the amounts above and enter the total here . . . . . . . . . 3 2,500 Step 4 a. Other income (not from jobs). If you want tax withheld for other income you expect this (optional): year that won't have withholding, enter the amount of other income here. This may include interest, dividends, and retirement income . . 6,500 Other 4(a