This is an example of calculating the federal income tax withholding using the percentage method. I'm looking at practice set B problem 3-4, item number 1. Hoffman is single with two federal withholding allowances. He earned a weekly gross pay of $440.55 for each period. He makes a 403b retirement plan contribution of 5 percent of gross pay. So, the first thing we need to do to determine the federal income tax withholding is to determine the amount of pay that will be taxable for federal income tax. We know that the gross pay for one period is $445. There is also a 403b contribution of 5 percent. A 403b contribution, as well as a 401k contribution, is deductible from gross pay for federal withholding purposes. So, we take our contribution, which is 5% times $445, and we come up with a contribution of $22.25. The amount of pay that is taxable for federal income tax, which I am summarizing or abbreviating as FIT (federal income tax), is $422.75. Now, for the percentage method, I'm following the steps in the book. The first step is to multiply the number of federal withholding allowances by the amount in the table. According to the table on page 92, the amount for one weekly payroll allowance is $76.90. So, we take two allowances times the weekly amount of $76.90, which is $153.80. The second step is to subtract the allowances from taxable pay. So, we have our taxable pay of $422.75 minus step number one of $153.80, and we get $268.95. And this is the amount for which we calculate the, or actually, the amount to use in the percentage tables. It's getting kind of messy here. Step three is to use the amount calculated in step two to determine the tax using the percentage method. The...
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W 4 allowances calculator Form: What You Should Know
Withholding Calculator Instructions for 2024 Tax Year (Form W-4) Calculate your Federal/State Tax Withholding With the help of the IRS Tax Withholding Calculator you can determine how much federal or state income tax to withhold, and get your taxes done. Learn how to determine your tax withholding with the IRS W-4 Withholding Calculator.
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