# Average Federal Withholding Tax by lhh17020

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Average Federal Withholding Tax document sample

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```									                  FORMULA DESCRIPTION

1. Add current wages to year-to-date wages.
2. Divide the result of Step 1 by year-to-date pay periods
(including current).
3. Multiply the result of Step 2 by frequency of pay to
arrive at projected yearly wages.
4. Projected yearly wages minus value of all exemptions
equals adjusted wages. (exemption value = number
exemptions x \$ 3,400.00)
5. Use adjusted wages and the appropriate table in the
Tax Table(s) Section to establish the yearly tax.
6. Yearly tax divided by frequency of pay equals pay
period tax, rounded.
7. Multiply the result of Step 6 by year-to-date pay periods
(including current) to arrive at the tax on year-to-date
wages plus current wages.
8. Subtract the year-to-date taxes from the result of Step
7 to determine the cumulative withholding tax on current
wages.

Note: Employers have the option of rounding the federal
withholding tax to the nearest dollar or the nearest cent.

Sample EE     Steps                                                          EE#
\$24,000.00   year-to-date wages                                              27697.64
+    \$12,000.00   current pay period wages                                         3317.24
=    \$36,000.00   total year-to-date wages                                        31014.88
÷            12   year-to-date pay periods (including current)                            8
=     \$3,000.00   average wages per pay period                                     3876.86
x            24   frequency of pay                                                       12
=    \$72,000.00   projected yearly wages                                          46522.32
-    \$13,600.00   4 exemptions                                                        3400 1 exempt
-    \$23,350.00   married table bracket deduction                                    33520
=    \$35,050.00   amount after bracket deduction                                   9602.32
x          0.15   married table tax rate                                               0.25
=     \$5,257.50   tax before adding carry over tax                                    4257
+     \$1,535.00   married table carry over tax                                     2400.58
=     \$6,792.50   yearly tax                                                       6657.58
÷            24   frequency of pay                                                       12

=       \$283.02 tax on \$ 3,000.00 average pay period wages, rounded               554.7983
x            12 year-to-date pay periods (including current)                             8
=     \$3,396.24 projected tax                                                     4438.387
-     \$1,763.19 tax on \$ 24,000.00 year-to-date wages                              3657.41
cumulative tax on \$ 12,000.00 current pay period
=     \$1,633.05 wages                                                             780.9767
II CUMULATIVE METHOD(S) SECTION
This method of withholding is used for
employees who earn wages that fluctuate
greatly from one pay period to the next, such
as employees earning commissions.

A. PERCENTAGE OF WAGES METHOD - U.S. CITIZENS/RESIDENTS

FORMULA DESCRIPTION

1 Add current wages to year-to-date wages.
Divide the result of Step 1 by year-to-date
2 pay periods (including current).

Multiply the result of Step 2 by frequency
3 of pay to arrive at projected yearly wages.
Projected yearly wages minus value of all
(exemption value = number exemptions x
4 \$ 3,500.00)
Use adjusted wages and the appropriate
table in the Tax Table(s) Section to
5 establish the yearly tax.
Yearly tax divided by frequency of pay
6 equals pay period tax, rounded.
Multiply the result of Step 6 by year-to-
date pay periods (including current) to
arrive at the tax on year-to-date wages
7 plus current wages.
Subtract the year-to-date taxes from the
result of Step 7 to determine the
cumulative withholding tax on current
wages.

Note: Employers have the option of
rounding the federal withholding tax to
8 the nearest dollar or the nearest cent.
Example:

Employee is married with four exemptions
and is paid semi-monthly. He was paid \$
24,000.00 for eleven payroll periods with year-
to-date taxes of \$1,561.20. He receives
wages of \$ 12,000.00 which brings his total
earnings for twelve pay periods to \$
36,000.00. The Federal Withholding Tax for
the Cumulative Method under the formula(s)
that became effective 01/01/2008 is
calculated as follows:

\$24,000.00 year-to-date wages
+                           \$12,000.00 current pay period wages
=                           \$36,000.00 total year-to-date wages
year-to-date pay periods (including
÷                                   12 current)
=                            \$3,000.00 average wages per pay period
x                                   24 frequency of pay
=                           \$72,000.00 projected yearly wages
-                           \$14,000.00 4 exemptions
-                           \$23,550.00 married table bracket deduction
=                           \$34,450.00 amount after bracket deduction
x                                 0.15 married table tax rate
=                            \$5,167.50 tax before adding carry over tax
+                            \$1,555.00 married table carry over tax
=                            \$6,722.50 yearly tax
÷                                   24 frequency of pay
tax on \$ 3,000.00 average pay period
=                              \$280.10 wages, rounded
year-to-date pay periods (including
x                                   12 current)
=                            \$3,361.20 projected tax
-                            \$1,561.20 tax on \$ 24,000.00 year-to-date wages
cumulative tax on \$ 12,000.00 current pay
=                            \$1,630.02 period wages

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