October 2007 FIGURING YOUR FEDERAL TAXES EFFECTIVE January 1, 2007 MONTHLY PAYROLL BIWEEKLY PAYROLL To determine the tax amount to be withheld, take your current Fed To determine the tax amount to be withheld, take your current taxable gross (not total gross), displayed at the bottom of your pay Fed taxable gross (not total gross), displayed at the bottom of stub, and multiply it by 12 (12 paydays in a year). Then subtract your pay stub, and multiply it by 26 (26 paydays in a year). $3,400.00 for each exemption claimed, which is displayed at the top Then subtract $3,400.00 for each exemption claimed, which is right of your stub. Use the remainder and the appropriate annual displayed at the top right of your stub. Use the remainder and tax table, based on claiming as ‘Single’ or ‘Married’, to establish the appropriate annual tax table, based on claiming ‘Single’ or your tax on an annual basis. Divide this annual tax figure by 12 to ‘Married’, to establish your tax on an annual basis. Divide this arrive at the Federal Tax withheld from your current monthly pay. annual tax figure by 26 to arrive at the Federal Tax withheld from your current biweekly pay. ANNUAL PAYROLL SINGLE person (including head of household) - MARRIED person - If the amount of wages If the amount of wages (after subtracting The amount of income tax (after subtracting The amount of income tax Withholding allowances) is: to withhold is: Withholding allowances) is: to withhold is: Not over $2,650………… $0 Not over $8,000 ………… $0 Over But not over of excess over Over But not over of excess over $ 2,650 $10,120 10% $2,650 $ 8,000 $23,350 10% $8,000 $ 10,120 $33,520 $747.00 plus 15% $10,120 $ 23,350 $70,700 $1,535.00 plus 15% $23,350 $ 33,520 $77,075 $4,257.00 plus 25% $33,520 $ 70,700 $133,800 $8,637.50 plus 25% $70,700 $ 77,075 $162,800 $15,145.75 plus 28% $77,075 $133,800 $203,150 $24,412.50 plus 28% $133,800 $162,800 $351,650 $39,148.75 plus 33% $162,800 $203,150 $357,000 $43,830.50 plus 33% $203,150 $351,650 $101,469.25 plus 35% $351,650 $357,000 $94,601.00 plus 35% $357,000 FIGURING YOUR STATE TAXES EFFECTIVE October 1, 2007 Employees paid MONTHLY – Subtract $283.33 from your Federal Employees paid BIWEEKLY – Subtract $130.77 from your taxable monthly gross for each exemption claimed. The remainder is Federal taxable biweekly gross pay for each exemption subject to withholding at the rate of 4.35% claimed. The remainder is subject to withholding at the rate of 4.35% 2007 FICA TAX Take your FICA Taxable Gross, displayed at the bottom of your pay stub and apply rates as follows: The 2007 Social Security (FICA) tax contains two parts. The Social Security (Old Age, Survivors, and Disability Insurance) FICA tax is based on the first $97,500 paid at the rate of 6.2% with a maximum amount withheld of $6,045.00. The Medicare (Medical Hospital Insurance) FICA tax is based on all earnings paid at the rate of 1.45%. (There is no limit on the Medicare FICA gross. The limit was eliminated as part of the Omnibus Budget Reduction Act of 1993). 2007 CITY TAXES Personal and dependency exemptions allowable for Michigan income tax purposes are also allowable for Michigan cities. The annual allowance for all cities is $600, except Grand Rapids. The annual rate equals $23.08 biweekly or $50.00 monthly. For Grand Rapids the annual allowance is $750, which equals $28.84 biweekly or $62.50 monthly. The rate on taxable earnings is 1% for residents and 0.50% for non-residents. These rates are uniform for all cities except Detroit and Grand Rapids. For Detroit, the rate is 2.5% for residents and 1.25% for non-residents. For Grand Rapids, the rate is 1.3% for residents and 0.65% for non-residents. SEE REVERSE PAYROLL NOTICE TAX “EXEMPT” STATUS FOR FEDERAL INCOME TAX If a student employee feels that they are eligible to BEGIN OR CONTINUE the “Exempt” status during 2007, THEY MUST COMPLETE a NEW FEDERAL W-4 FORM EACH YEAR. If qualified, remember to write the word “Exempt” in Box 7 on the W-4. This form expires on February 15 of the following year. You will begin having taxes withheld again unless you complete a new Form W-4 each year to continue the EXEMPT STATUS. 1. WHEN CAN A STUDENT CLAIM EXEMPT FROM FEDERAL INCOME WITHHOLDING? If a student’s parent(s) or someone else will claim the student as a dependent on their annual tax return, the student cannot claim exempt if the student’s own wages plus any non-wage income, such as interest on savings, will exceed $850.00 in total. If no one else will claim the student as a dependent on their annual tax return, then the student can claim exempt if the total wages and other income will not exceed $8,750.00 if single. Or, if married the combined wages and other income will not exceed $17,500.00. As a student, please read the W-4 instructions thoroughly to make sure that you qualify for EXEMPT before completing the W-4. NOTE: NON-RESIDENT ALIENS are not allowed to claim exempt from income taxes. 2. WHEN CAN A STUDENT CLAIM EXEMPT FROM STATE INCOME WITHHOLDING? Students must be eligible to and be claiming exempt for Federal Income tax purposes in order to be eligible to claim exempt for State Income taxes. Also, their total earnings must be $3,400.00 or less for the year.
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