Calculations Percentage Method Tax Withholding; Depositing and Reporting Withheld Taxes; Garnishments

Problem # 1 Calculate the employee’s disposable earnings from the following information. Gross Wages: $2,493.75 Total Taxes Withheld: $556.31 Cafeteria Plan Deductions: $243.88 401(k) deferral: $122.81 Answer: $1,937.44 $2,493.75 – $556.31 = $1,937.44

Problem # 2 Calculate the next day federal tax deposit from the following payroll tax information. Federal Income Tax Withheld: $1,097,362.44 State Income Tax Withheld: $192,297.01 Social Security Tax Withheld: $200,778.96 Medicare Tax Withheld: $87,343.47 Medicare Surtax Withheld: $15,173.43 Local Income Tax Withheld: $3,478.75 Answer: $1,688,780.73 $1,097,362.44 + $200,778.96 + $200,778.96 + $87,343.47 + $87,343.47 + $15,173.43

Problem # 3 Calculate the amount of wages subject to a federal tax levy from the following payroll tax information. Semi-monthly Gross Wages: $2,500.00 Part 3 of Form 668-W: Married, filing jointly with 4 exemptions Deductions in place: $664.40 Answer: $631.43 $2,500.00 - $664.40 = $1,835.60 $1,835.60 - $1,204.17 = $631.43 (goes to IRS) Table indicates what employee can take home

Problem # 4 An employee has disposable earnings for the semi-montlhy pay period of $1,818.39. The employer receives a creditor garnishment order requiring that $500.00 be withheld. The employee has a child support order withholding in place for $150.00. What is the amount that can be garnished under federal law for the creditor garnishment? Answer: $304.60 The lessor of : $1,818.39 x 25% = $454.5975 $1,818.39 – ((($7.25 x 30 hours) x 52) / 24) = $1,347.14 $454.60 - $150.00 = $304.60

Problem # 5 An employee has disposable earnings for the bi-weekly pay period of $1,133.42. The employer receives a child support income withholding order requiring that $700.00 be withheld for each bi-weekly payroll period. The employee is not in arrears nor supports another family. What is the amount that can be garnished under federal law for the child support withholding order? Answer: $680.05 The lessor of : $1,133.42 x 60% = $680.05 $700.00 (amount indicated on IWO)

Problem # 6 An employer as three employees. Two of the employees worked full time and earned salaries of $23,000 each in the quarter. The third employee worked only part time and earned $6,650 in the quarter. The employer paid the state unemployment tax payment timely for the quarter. How much FUTA tax is due from the employer after the credit for the state unemployment tax payment is taken? Answer: $123.90 $7,000 + $7,000 + $6,650 = $20,650 6% - 5.4% = .6% x $20, 650 = $123.90

Problem # 7 Using the percentage method, calculate the amount subject to withholding from the following payroll tax information. Gross Pay: $800.00 Form W-4: Single with 2 exemptions Pay Frequency: Weekly Answer: $644.20 $77.90 x 2 = $155.80 $800 - $155.80 = $644.20

Problem # 8 Using the percentage method, calculate the employee’s federal income tax withholding from the following payroll tax information. Gross Pay: $5,553.34 Form W-4: Single with 2 exemptions Pay Frequency: Semi-monthly Cafeteria Plan Deductions: $62.01 401(k) Deferral Amount: $270.83 Post tax Deductions: $713.69 Step 1: Determine the federal income taxable wages $5,553.34 - $62.01 - $270.83 = $5,220.50

Problem # 8 Using the percentage method, calculate the employee’s federal income tax withholding from the following payroll tax information. Federal Income Taxable Wages: $5,220.50 Form W-4: Single with 2 exemptions Pay Frequency: Semi-monthly Step 2: Determine exemptions $168.80 x 2 = $337.60

Problem # 8 Using the percentage method, calculate the employee’s federal income tax withholding from the following payroll tax information. Federal Income Taxable Wages: $5,220.50 Form W-4: Single with 2 exemptions ($337.60) Pay Frequency: Semi-monthly Step 3: Determine amount subject to federal income tax withholding $5,220.50 - $337.60 = $4,882.90

Problem # 8 Using the percentage method, calculate the employee’s federal income tax withholding from the following payroll tax information. Federal Income Taxable Wages: $5,220.50 Form W-4: Single with 2 exemptions ($337.60) Pay Frequency: Semi-monthly Step 4: Determine amount of federal income tax withholding $4,882.90 - $3,925 (excess) = $957.90 $957.90 x 28% = $268.212 $268.21 + $779.75 = $1,047.96

Problem # 9 Using the percentage method, calculate the employee’s federal income tax withholding from the following payroll tax information. Federal Income Taxable Wages: $8,003.33 Form W-4: Married with 4 exemptions Pay Frequency: Monthly Answer: $812.15 Exemptions: $337.50 x 4 = $1,350.00 $8,003.33 - $1,350.00 = $6,653.33 - $2,275.00 = $4,378.33 $4,378.33 x 15% = $656.7495 $656.75 + $155.40 = $812.15